Key accounting terms

Someone to whom you have sent a (sales) invoice for your goods
or services.

A customer to whom you have sent out a (sales) invoice and which
currently remains unpaid or outstanding in Xero/QuickBooks.

Someone from whom you have bought goods or services and have
(should have) received an invoice from.

Someone from whom you have (should have) received an invoice from,
but which remains unpaid in Xero/QuickBooks.

Expenses vs invoices
an expense is an ‘out of pocket’ minor cost that is paid by debit
card/personally, is generally non VATable and doesn’t generate a
formal invoice’. An invoice is a formal document received from a
VATable supplier for a larger business cost, and generally paid within
credit terms (14/30 days), or sometimes by credit card.

Reconciliation (bank, PayPal etc.)
this is where all the transactions in a bank (or similar) account have
been (accurately) input into Xero/QuickBooks and the balance on the
account in Xero/QuickBooks matches that of the bank statement.

Directors loan
this is where monies are taken from a company bank account to, or for
the benefit of, that director, and these monies are not specifically for
the payment of salary or dividends.

Profit & loss
this is the key financial report that reflects all of the ‘day to day’
business income and costs that have been input into Xero/QuickBooks
for the month/quarter/year to date, and indicates whether the business
is making a profit or loss.

Making tax digital
this is HMRC’s ongoing project, which will progress from VAT returns
(which it covers now) through to all business and personal taxes, and
which will compulsorily require all companys’ and individuals’
information to be linked with and/or submitted directly to HMRC via
accountancy software (such as Xero/QuickBooks).