There are lots of accounting definitions and bookkeeping terms which you may be unfamiliar with. We have compiled a list of the most popular ones with a brief description. Some also have links for further reading and information.
As there are so many we have split the list into four sections, this is section 2, including E to M
The other sections on accounting definitions can be found using the links at the bottom of the page.
If you cannot find a term or definition that you need, please get in contact, and we will try and add it in.
Accounting Definitions E – M
|Equity||The word equity is used to refer to an ownership interest in a business. It can include stockholders' equity or owner's equity.|
|Expense||An expense to the business is money paid for items or services. The Profit and Loss account shows income and expenses.|
|Export||Can either mean to export goods to a foreign county or to export transactions from software this can include download to Excel or PDF.|
|Financial Statements||The financial statements are Profit and Loss, Balance Sheet and Cash Flow. The statements are used by company owners and lenders to make financial decisions about the business.|
|Goodwill||Is an intangible asset on the Balance Sheet. It is normally calculated when a business is sold and will include a cost for brand, customers and business value.|
|Goods||Products that are purchased and sold within a business.|
|Gross Profit||Total Sales less the cost of goods sold equals gross profit. Cost of goods sold includes the cost of the goods and all costs in making it.|
|Import||Can either mean to bring in transactions to an accounting package, an example of this is to download your bank transaction from your bank and import them into accounts software. Import can also mean to bring goods into the country.|
|Income||All revenue for the business which is shown at the top of the profit and loss account.|
|Indirect costs||Are cost that does not relate directly to a specific project. An example is advertising the business, which promotes the whole business.|
|Invoice||A document which states what goods or services have been provided and how much is due. Sales invoices are sent to your customers, and purchase invoices are received from suppliers.|
|Journal||A transaction in accounts software which moves an amount from one account code to another. It can also be a place where you record all the business financial transactions in either a book, spreadsheet or software.|
|Ledger||Is a book or computer file used for maintaining the accounts. It holds all the information to prepare the financial statements.|
|Liabilities||Are things that the business owes to other organisations and people; they can include loans, overdrafts and money owed to suppliers.|
|Limited Company||Is formed in the UK and is limited by the shares. Any legal action is taken against the company rather than the individuals.|
|Long-term Liabilities||Part of the Balance sheet and they are money owing over one year; they can include long-term loans and mortgages.|
|Loss||If the income is less than the outgoings then a loss has been made. A loss can also be made if you sell a fixed asset for less than its value.|
|Margin||Is the difference between the selling price of goods and the cost price. Example is goods are purchased for £80 and sold for £100, the margin is £20.|
Return from Accounting Definitions to Business Accounting Basics page