glossary of financial management terms
This section contains an alphabetical list of terms used in the chapter.
glossary of financial management terms
A,
B,
C,
D,
E,
F,
G,
I,
J,
K,
L,
M,
N,
O,
P,
Q,
R,
S,
T,
U,
V,
W,
X,
Y,
Z
- ACC levy
- Accident Compensation Corporation levy – expense paid to government to cover costs of employees injuring themselves at work.
- Accounting
- The language of business'. Recording the monetary and economic transactions of an entity.
- Asset
- An item owned by the organisation that has a life expectancy of more than one year. Or money owed to the organisation.
- Asset Schedule
- A statement of all assets. Showing asset cost, opening book values, depreciation rates, depreciation, accumulated depreciation and closing book value.
- Balance Date
- The date that your organisation’s financial year ends each year (e.g. 31 March or 30 June etc).
- Credit
- An entry signifying an increase in a liability, revenue or equity account or a decrease in an asset or expense account.
- Creditors
- People that you owe money to, e.g. for bills that haven’t been paid yet. The total amount that the organisation owes at the end of the financial year is usually included in the balance sheet as 'sundry creditors' or 'accounts payable'.
- Debit
- An entry signifying an increase in an asset or expense account or a decrease in a liability, revenue or equity account.
- Debtors
- People that owe you money. The total amount that is owed to the organisation at the end of the financial year is usually included in the balance sheet as 'sundry debtors' or 'accounts receivable'.
- Depreciation
- The expense relating to the decrease in value of an asset in one year.
- Double Entry Accounting
- Every type of transaction that an organisation is engaged in has a two-fold effect. If the amount of cash in the business is increased, then someone must have provided the money for it to be increased. If the business pays out some money then it must be giving it to someone. In other words every time something is given someone else must be receiving it.
- Equity
- Net assets of the organisation e.g. assets less liabilities or previous year equity plus surplus (deficit) of current year. What the organisation actually owns in the business.
- Exempt Supplies
- Goods and Services that are not subject to GST e.g. bank fees, donated goods and services sold by not-for-profit bodies.
- Expense
- Money spent to carry out the activities of the organisation.
- GST
- Goods and Services Tax.
- Income
- Money received while carrying out the activities of the organisation.
- Invoice Basis
- Account for GST at the earlier of giving or receiving an invoice OR paying or receiving money.
- IRD and GST Registration Number
- The unique IRD number for your organisation, this will be the same number for all taxes your organisation is liable for e.g. PAYE, GST, ACC etc.
- Liability
- Money owed by the organisation.
- Net Book Value (Assets)
- Total cost of assets less the accumulated depreciation e.g. cost less how much depreciation has been written off since the asset was purchased.
- Not-for-profit Organisation
- Institutions, societies and clubs whose primary purpose is the provision of services to members/community, and is not to make a profit. Any surpluses are accumulated within the organisation and used in the furtherance of the objectives of the organisation.
- PAYE
- Pay as you earn. Tax deducted from employees wages and paid to Inland Revenue. The amount paid to employee plus the amount of PAYE paid to Inland Revenue equals the employee gross wage.
- Payments Basis (Cash Basis)
- Account for GST when you pay or receive money.
- Petty Cash fund
- A small amount of cash kept to pay for minor expenses (e.g. milk, stamps), records kept of purchases and balances. When the amount of cash gets low a petty cash cheque is written to reimburse the fund for what has been spent.
- Schedule of Unspent Grants
- A statement showing all grants received in current year, the amount spent in that year and what is left unspent at the end of the organisation’s financial year.
- Statement of financial performance (profit and loss)
- A statement showing all income and expenses for a period. The difference between income and expenses will be your surplus or deficit.
- Statement of financial position (balance sheet)
- A statement of assets, liabilities and equity at a specific date i.e. what is owned and what is owed.
- Surplus (Deficit)
- Net result for period (income less expenses).
- Zero Rated Supplies
- Taxable supplies that attract 0% GST e.g. exported goods or sale of a going concern.
(From Community Accounts and Mentoring (CAMS), Wellington).
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