We recently passed the 400^th anniversary of Shakespeare’s death, marking the occasion with celebrations of his long lasting influence. Many of you will recognise the first line of Mark Antony’s famous speech in Shakespeare’ Julius Caesar, and yet not all of us could place it in context.

It is hard to think of anyone else who has had such an impact on the English language. Many of Shakespeare’s sayings and phrases are still used in our everyday vocabulary – even by those of us who were less than fond of studying his works at school! Shakespeare has largely contributed to the diverse language we enjoy today and the abundance of words we have available to express ourselves. The only downside of such a rich language is its complexity, and the misunderstandings that can and often do arise.

This brings us to the language of business and accounting.

“It’s all Greek to me”

“It’s (all) Greek to me”, (another frequently used Shakespearism), is a common response from many business owners and individuals who use finance or legal professionals. We know that Accountants (probably closely following lawyers!) are amongst the worst offenders when it comes to talking in technical jargon.

A4G are conscious of this, which is why we ensure that our down to earth, yet professional approach is in line with our mission statement – ‘to be the best all-round advisers to owner-managers’.  We also invest heavily in our systems to continuously improve our communication with our clients. Inevitably there are terms we use that are not familiar to all, so we’ve listed some below that you might hear from time to time when discussing accounts, along with a brief description of meaning:

Profit and loss – A summary of the sales, costs and expenses for a specific period of time, usually a financial year

Gross profit – The difference between sales and the cost of goods/services that have been sold

Net profit – The gross profit less overhead expenses, including finance costs and depreciation charges

Fixed assets – Items such as machinery, motor vehicles or computer equipment that are not purchased for resale but are to be used in the business for longer than one year

Trade debtors/accounts receivable – Amounts that are owed by customers

Trade creditors/accounts payable – Amounts that are owed to suppliers

Prepayments – Amounts charged in advance for a service used by the business, such as insurance or rent, which covers a period longer than the financial year

Accruals – The opposite of a prepayment. This is a cost which relates to goods/services used in the financial period but for which a purchase invoice has not been received or it is dated after the end of financial period

Accrued income – Accounting for sales of services provided during thefinancial year but which were not invoiced to customers until after the year end

Deferred income – The opposite of accrued income. If sales are invoiced in advance and the service is not provided until after the year end, the sales income should be moved into a future period

Work in progress – Costs which have been incurred directly relating to jobs which are still ongoing at the year end

Balance sheet – A summary showing a snapshot of what a business owns and owes, and therefore what it is worth on paper (excluding any goodwill), at a specific date

Goodwill – An amount that someone may be willing to pay over and above the market value of assets due to other considerations such as reputation, knowledge and customer databases the business holds

Insolvent – Being unable to pay debts as and when they fall due. We hope not to have to use this term!

Opening balances adjustments – These are the adjustments required on a computerised bookkeeping system, such as xero or sage, so that the prior year balance sheet matches the finalised accounts that have been signed

As always, if you ever have any questions or concerns, please call or email – a member of our team will be happy to help!