Accounting Basics

Basic Accounting Concepts

Accrued expenses/ expenses payable

Expenses that are still owing at the end of the financial year.
Accrued income/income receivableIncome that is still owing to the business at the end of the financial year.
AssetItem of value owned by a person or business which enables a profit to be made.
Bad debts Creditors People/suppliers the business owes money to.Debts written off as the debtors are unlikely to settle their accounts.
Cost of salesCost of sales is the cost price of all goods that have been sold.
DebtorsPeople who owe the business money for goods bought on credit.
DepreciationThe amount by which fixed assets reduce in value over time due to use.
Income received in advance/deferred income

Income that has already been received by a business but which is for the next financial year.