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account Something to which transactions are assigned. Accounts in AccountRight are in one of eight classifications:
Accounts can be set up as header or detail. Transactions are assigned directly to detail accounts. Header accounts are used to summarise and group multiple detail accounts. Each AccountRight account must have a unique number. account classification One of the eight accounts groups in the Accounts List: Assets, Liabilities, Equity, Income, Cost of Sales, Expense, Other Income, Other Expense. account numberThe account number identifies an account. Each AccountRight account must have a unique number.account typeA label assigned to each account to indicate its classification. For header accounts, account type names are the eight account classifications. Detail accounts have multiple asset (Bank, Accounts Receivable, Other Current Asset, Fixed Asset, Other Asset) and liability (Credit Card, Accounts Payable, Other Current Liability, Long Term Liability, Other Liability) account types. Each of the other six classifications has just one account type, each named the same as the classification.accounting periodA part of your financial year. AccountRight treats each calendar month as a separate accounting period. accounts listCommonly referred to as a chart of accounts, this is a list of all your asset, liability, equity, income, cost of sales and expense, other income and other expense accounts.accounts payableWhat you owe someone else for goods or services delivered. The sum of all accounts payable is recorded as a liability account. Any time you record a purchase in the Purchases command centre, the unpaid balance of the purchase is added to your accounts payable. Every time you pay a bill, the amount is subtracted from your accounts payable balance.accounts receivableWhat your customers owe you. The sum of all accounts receivable is recorded as an asset account. Any time you record a sale in the Sales command centre, the unpaid balance of the sale is added to your accounts receivable balance. Every time you enter a customer payment, the amount is subtracted from your accounts receivable balance.accrual method (basis)This is a method of accounting which records sales and purchases at the time they’re delivered, not at the time they’re paid for. This is the opposite of the cash method of accounting.accrued expensesThese are expenses for goods or services received but not yet paid. AdministratorA role you can assign to a user, that gives them access to the entire company file. The Administrator ID is created automatically upon creation of the company file. A user with an administrator role can create other user accounts.ageing: payablesThe number of days between receiving a bill from a supplier and an ageing date (usually today). ageing: receivablesThe number of days between invoicing a customer and an ageing date (usually today).allocation accountsIn AccountRight, when writing a cheque or recording a payment, the allocation accounts are the expense, income, etc. accounts that balance the transaction.assetsAssets are things you own. Your bank account is an asset. So is your computer. If someone owes you money, the total owed to you is an asset. Current assets are assets that can be turned into cash within a relatively short period of time (less than a year). Things that take longer to turn into cash, like your factory building, are called fixed assets. Assets normally have a debit balance.
- Cost of sales
- Other income
- Other expense
bad debtMoney owed to you that is unlikely to be paid. Many businesses create a contra-asset account to approximate the value of their bad debt. That way, they have a clearer picture of the actual value of their assets.balanceThe sum of all the money added to and subtracted from an account.balance sheetThe balance sheet is a financial snapshot of a company’s position at a particular time. A balance sheet lists the company’s asset, liability and equity accounts. It is called a balance sheet because the total value of the asset accounts minus the total value of the liability accounts always equals the total of the equity accounts.billThe record of a supplier’s invoice.budgetsExpected monthly net activity for an account. Budgets are useful for planning for the future and for analysing actual performance against planned performance.
cardA record of contact information and other details of customers, suppliers, employees and personal acquaintances.cash drawerWhere the money is kept between leaving the customers’ hands and being deposited in the bank. Many businesses set up their cash drawer as a bank account.cash flowThe net flow of money in minus money out over a selected date range.cash method (basis)The opposite of the accrual method of accounting. The cash method records the sale and purchase of goods and services at the time they’re paid for, not when they’re delivered.categoryA category is an entity for grouping transactions. For example, a category can be a department, profit centre, geographic division or any other subset of your business that requires separate reporting.clearedA withdrawal or deposit is cleared when your bank adjusts your account balance for it.closed periodAn accounting period in which all entries are completed. AccountRight does not require that you actively close a period. However, in Preferences you can prevent accidental posting to a closed (locked) period.closed purchasesPurchases that have been paid in full.closed salesSales that have been paid in full.comma-separated text fileA file format in which fields are separated by commas. Files in this format can usually be imported into AccountRight software.company file A file comprising all your company’s financial information such as business name, contact information, accounts and account transactions.company informationYour company information contains your company’s name, address, tax information and information about your company’s financial year.contra accountThis is an account that normally carries the opposite balance of the accounts of the same type. Assets, for example, normally have a debit balance; a common contra-asset account is the accrued depreciation of an asset. By using a contra account, you can show a company a car that’s worth $12,000, by listing the asset at its $15,000 purchase price followed by the -$3,000 balance of the accrued depreciation account. conversion monthThe conversion month is the earliest month in the financial year for which transactions are to be recorded. For example, suppose you purchase your AccountRight software in October but want to record transactions dated from 1 September. In this case, your conversion month is September. The conversion month determines the opening balances you will enter when you set up your company file.cost of salesSometimes called cost of goods sold, this account type works just like an expense account. The only difference is where it appears on the profit & loss statement. Cost of Sales accounts appear after your income accounts but before your expense accounts. Cost of Sales is subtracted from your income to produce gross profit. Your expenses are subtracted from your gross profit to produce net profit. You are not required to use Cost of Sales accounts.credit amountAppears on the right side of the ledger (a debit amount occupies the left side). A credit amount increases the balance of accounts with a credit balance and decreases the balance of accounts with a debit balance. Accounts that normally carry a credit balance are liability, equity and income accounts.credit invoiceA credit invoice is a sale with a negative bAccountRightalance due. Usually caused by a return or adjustment, a credit invoice is settled by writing a refund cheque or applying the amount to another open invoice.credit termsTerms are the agreed upon rules governing the number of days between delivery and payment discounts for early payment and penalties. You can set default terms for all customers.creditorsA creditor is someone to whom you owe money. See also accounts payable.current assetsAssets that can be turned into cash within a relatively short time (less than a year) are called current assets. Some of your current assets are your bank accounts, accounts receivable and petty cash. Current assets usually do not lose their value over time. Current assets normally have a debit balance.current liabilitiesLiabilities that become payable within the next year are called current liabilities. When recording a liability that is to be paid over a long period, many accountants split it into two liabilities. The part that is to be paid off within the next year is entered as a current liability; the remaining part is entered as a long-term liability.current year earningsCurrent year earnings is an equity account. Its balance equals your income minus cost of sales and expenses. Current year earnings are zero at the beginning of a financial year. Current year earnings are kept as a running total as the financial year progresses. When you start a new financial year, current year earnings are reset to zero when its balance is moved into the account called Retained Earnings.customerSomeone to whom you sell goods or services. In AccountRight, you must enter a customer card before you record a sale.
debitAppears on the left side of the ledger (the credit amount occupies the right side); a debit amount increases the balance of accounts with a debit balance and decreases the balance of accounts with a credit balance. Accounts that normally carry a debit balance are assets and expense accounts.debit purchaseA debit purchase is a purchase with a negative balance due. Usually caused by a return or adjustment, a debit purchase is settled by recording a supplier’s refund cheque or applying the amount to another open bill.debtorsA debtor is someone who owes you money. See also accounts receivable. deposits from customers Advances received for goods or services not yet delivered. Customer deposits are kept in a liability account.deposits to suppliersAdvances paid to suppliers for goods or services not yet delivered. depreciationThe expense allocation of the cost of an asset over a period of time. Most accountants create a contra-asset account to track the depreciation of an asset. See also contra account. A typical depreciation transaction credits the contra asset account and debits a depreciation expense account. Depreciation is most often recorded as a general journal entry.detail accountsAn AccountRight account to which transactions can be assigned.discount early paymentThe amount taken off the balance due in return for payment within an agreed number of days.discount daysThe number of days from a sale or purchase within which full payment of the balance due entitles the payee to a discount.double-entry accountingA method of bookkeeping in which every entry is balanced by another entry. Correct double-entry accounting always provides a balanced set of books; that is, the total value of your asset accounts minus the total of your liability accounts will equal the total of your equity accounts.
earningsIncome minus cost of sales and expenses. See also current year earnings.equityThis is a company’s net worth. The equity of a company equals its assets minus its liabilities. Equity is an account type in AccountRight. Equity accounts usually carry a credit balance. Some common equity accounts are current year earnings, retained earnings and shareholder’s equity.expenseA cost associated with running a business. Expense is an account type in AccountRight. Expense accounts usually carry a debit balance.
finance chargeThe amount added to an outstanding balance as a penalty for late payment.financial statementsThe balance sheet and income (profit & loss) statement. The balance sheet is your company’s financial picture at a particular time. The income statement shows your company’s financial performance over a period of time.financial yearThe 12-month period you use to define your accounting year. Your AccountRight software does not require that it match the calendar year. fixed assetsFixed assets are assets that have a relatively long life. Your buildings, cars and computers are fixed assets. Fixed assets are usually depreciated; that is, they lose some of their value as you use them.
general journalA journal used to record miscellaneous transactions not entered in other journals, for example, year-end adjustments and depreciation expense.general ledgerThis is where all your account information—sales, purchases, inventory, cash in, cash out—come together. You draw your financial statements (balance sheet and income statement) from the general ledger.gross profitGross profit is your income minus cost of sales.
header accountA header account in AccountRight is used to group similar detail accounts. You cannot post a transaction to a header account.historical balanceThe balance of an account prior to converting your records to AccountRight. You are not required to enter historical balances in AccountRight. Enter them only if you wish to compare a current month’s activity to the activity for the same month last year. historical purchaseA purchase that had a current balance due on the first day of the month in which you began using your AccountRight software. Also known as a pre-conversion purchase.historical saleA sale that had a current balance due on the first day of the month in which you began using your AccountRight software. Also known as a pre-conversion sale.
identifiersA one-letter code used to sort and select cards in the card file. You can assign up to 26 identifiers to a card.inactiveIf you rarely use a card or item and you do not want it to appear in selection lists, you can make it inactive. The record and its history still exists and can be manually added to a transaction. Items and cards can be made active again at any time. incomeRevenue from the sale of goods or services. Income is an account type in AccountRight. Income accounts usually carry a credit balance.income statementAlso called a profit & loss statement, the income statement shows your company’s performance over a period of time. An income statement begins with income. It then subtracts cost of sales to produce a gross profit. Expenses are subtracted from gross profit to produce operating profit. ‘Other income’ accounts are added to operating profit and ‘other expense’ accounts are subtracted from operating profit to produce net profit.invoiceThe written record of a sale. itemA unit in your items list. An item can be physical inventory, like a widget or a pair of shoes, or it can be non-physical, like an hour of your time.
journalA journal is a tool for organising your accounting entries. All entries are grouped into one of sixfour journals: general, disbursements, receipts, and sales, purchases or inventory. journal entryA transaction consisting of equal debit and credit amounts. journal type A full list of all different journal types:
- Sales (All invoice layout types), Customer Discounts, Customer Finance Charges
- Purchases (All invoice layout types), Supplier Discounts, Supplier Finance Charges
- Supplier Payments, Supplier Deposits, Paycheques, Money Spent, Money Transfer
- Customer Payments, Customer Deposits, Money Received
- Inventory Adjustment, Inventory Transfers
liabilityLiabilities are things you owe. Your working capital loan is a liability. Your accounts payable, what you owe someone for a purchase, is also a liability. Liabilities that are due within the next year are called current liabilities. When a liability is not due for more than a year, it is called a long-term liability. Liabilities normally have a credit balance.libraryThe location on your computer or a network computer where AccountRight company files are stored.line itemThe information entered in one row of the scrolling list for a transaction (sale, purchase, nominal journal entry).linked accountLinked accounts are what AccountRight uses to post your inventory, sales and purchasebanking transactions to the proper account. When, for example, you link your receivables account, you are telling AccountRight which account to post the balance due from a sale to.locked periodAn accounting period in which entries are no longer allowed. long-term liabilitySomething you owe that does not have to be paid for at least a year.
miscellaneous purchasesMiscellaneous purchases are used in AccountRight to record non-item purchases that do not require a printed purchase order.miscellaneous salesUsed in AccountRight to record non-item sales that do not require a printed invoice.
net incomeNet income (net profit or loss) is the total of all income accounts minus the sum of your expense and cost of sales accounts.net profitThe total of all income accounts minus the sum of your expense and cost of sales accounts. Also called net income.
open billA purchase with an outstanding balance due.open saleA sale with an outstanding balance due.opening balanceThe balance of an account as at the start of the first day of your conversion month. operating profitThis is your profit before considering Other Income and Other Expense.other expensesAn account type used to record expenses that are not directly related to your company’s operations, such as loan interest, fines, etc. ‘Other expense’ accounts usually have a debit balance.other incomeAn account type used to record income that is not directly related to your company’s operations, such as interest income. ‘Other income’ accounts usually have a credit balance.out of balanceWhen the total credit amount does not equal the total debit amount in a transaction, it is out of balance. AccountRight does not allow you to record an out-of-balance transaction.
paid-up capitalThe amount of money paid by shareholders in excess of the par value of the shares.payablesWhat you owe someone else for items or services delivered. See also accounts payable.postingTransferring a journal entry to the General Ledger.prepaidA transaction for which the balance is due at the time the transaction occurs. No credit is extended to the customer in a prepaid transaction.profit & loss statement. See income statement.promised dateThe date a pending sale or pending purchase is due to be delivered.
quoteAn estimate you provided to one of your customers or received from one of your suppliers. A quote doesn’t create a transaction, so it has no impact on your financial records or stock levels. No payments can be applied to a quote.
realised losses and gainsActual changes in the value of your assets, liabilities and equity that occur when you exchange foreign currency for your local currency.receivablesWhat someone else owes you for items or services delivered. See accounts receivable.reconcilingThe process of checking that your records agree with your bank’s records.recurring transactionAn accounting entry that is made periodically, such as weekly payroll, monthly rent, etc. retained earningsMoney from previous years’ earnings that has been left in the company. At the end of a financial year any money earned (or lost) during the financial year is transferred to retained earnings. Retained earnings are recorded in an equity account.revenueIncome from the sale of goods or services. Revenue is recorded in an income account in AccountRight. Income accounts usually carry a credit balance.reversingThe process of cancelling a transaction by entering a new transaction with the same amounts but with opposite signs.roleA set of windows and functions that a user can access in the company file. The Administrator role is assigned to users who require full access to the company file.
settle a credit invoiceWhen someone returns something, and you record an invoice that has a negative balance due, it is called a credit invoice. Paying off this negative amount is called settling a credit invoice. settle a debit purchaseWhen you return something to a supplier, and you record a purchase with a negative balance due, it is called a debit purchase. Paying off this negative amount is called settling a debit purchase.shareholders’ equityThe owners’ stake in the company. It is the amount the owners invested in the company plus the current year earnings and retained earnings.supplierSomeone from whom you buy goods or services. In AccountRight you must enter a supplier card before you can record a purchase. See also accounts payable.
tab-delimited file formatIn this file format, fields are separated by tab spaces. Files in this format can be opened by most word processing and spreadsheet software and can usually be imported into AccountRight software.termsTerms are the agreed upon rules governing the number of days between delivery and payment, discounts for early payment and penalties for late payment.transactionAn entry in AccountRight that affects the balance of accounts.trial balanceThis is a report showing all the activity for an account or accounts within a selected date range. It shows the balance of the account at the beginning of the date range, the activity within the date range, and the balance at the end of the date range. A trial balance is useful for checking your entries prior to doing your period-end processing.
undeposited funds accountThe linked account into which individual cash-receipts transactions are recorded when not credited directly to cheque or credit card accounts. Amounts from individual transactions in the undeposited funds account are grouped together. When deposited, they are recorded as a single bank deposit transaction on the bank or credit card statement.unrealised losses and gainsPotential changes in the value of overseas transactions when dealing in multiple currencies; affects only open (unpaid) transactions.user accountsUser accounts are the basis for the software’s security system, and can be used to keep track of the actions of each person who performs tasks that affect the company file. A user ID and password is entered when signing on to the company file.