Accounting period – the period of time which an organisation adopts between the production of financial statements.
Accounting standards – set of principles or standards issued by the accounting professional bodies to assist the definition and treatment of financial reporting.
Balance sheet – record of a club’s assets, liabilities and members’ funds for the organisation as at a certain date:
Assets – liabilities = members’ equity
It is a snapshot or a statement of the organisation’s financial position as at that date.
Cash accounting – an accounting basis that brings items into the accounts when they are physically received or spent.
Cash flow statement – a statement required in an annual report. Gives a summary of:
Constitution – name given to the memorandum and rules of an organisation.
Current assets – an item which in the normal course of business is expected to be turned into cash within 12 months.
Current liabilities – items which some of the assets are committed to have ie. funding in advance bank overdrafts or money set aside for leave provisions.
Current ratio – ratio of current assets to current liabilities. It is a measure of liquidity for the next 12 months.
Depreciation – accounting process used to reduce the book value of an asset over its defined useful, or effective, life.
Fixed asset – costs that do not increase as the volume/activity of your business increases eg rent.
Insolvency – when an organisation cannot pay its debts as and when they fall due.
Liquidity – the ability of an asset to be easily converted into cash with minimum delay and little or no loss of capital.
Net profit – the profit remaining after expenses, interest and accounting treatments, such as depreciation, have been taken into account.
Non-current assets – items that are not expected to be converted into cash within 12 months.
Operating profit – the profit arising from the organisation’s ordinary operations.
Profit and loss – financial statement which reflects the financial results (profit or loss) of the organisation over a certain period.
Ratios – calculations of performance figures which compare one item with another, such as debt/equity.
Variable costs – costs that increase as the volume/activity of your organisation increases eg fuel costs for a motor vehicle.
Working capital – funds available for the day to day operations of the business:
Current assets – current liabilities = working capital
Written down value – the amount left to depreciate on a fixed asset. Often this is also called the carrying value.