IR10 Glossary
| Terminology | Description |
|---|---|
Accounting book value | The accounting book value of a fixed asset can be calculated by its cost, plus revaluations, less accumulated depreciation and impairments/write-offs. |
| Assets | Items of value owned by a business:
|
Bad debts | A bad debt is a credit sale for which the business doesn’t expect to receive payment. |
Balance sheet or statement of financial position | This shows the financial position of a business at the end of an accounting period. |
Creditors or accounts payable | Suppliers the business owes money to. |
Debtors or accounts receivable | Those who owe the business money for goods or services supplied. |
| Drawings | Amounts taken from the business by the owners during the year. This includes private use of assets, private expenditure and goods. |
Expenses | Amounts paid or incurred for the purpose of generating revenue. |
Generally accepted accounting principles (GAAP) | A framework of accounting standards, rules and procedures defined by the professional accounting industry. In New Zealand, the External Reporting Board sets and administers these standards. |
GST-exclusive accounts | The financial statements do not include GST in income, expenses and assets and liabilities apart from accounts receivable and accounts payable. |
GST-inclusive accounts | The financial statements include GST in income, expenses, assets and liabilities. The profit and loss statement treats GST payable as an expense and GST refunds as income. |
Gross income | Income before any deductions or expenses. |
Income year | The year ended 31 March, or the year ended on another date where the customer has made an election that has been approved by Inland Revenue under section 38 of the Tax Administration Act 1994. |
International financial reporting standards (IFRS) | Accounting standards that make company accounts understandable and comparable across international boundaries. |
Liabilities | These are amounts owed by the business to outside parties including:
|
Owners’ equity | This represents the net assets of the business. It is equal to total assets less total liabilities. With a company this will be the sum of paid up capital, reserves and retained profits/ losses. With a partnership or sole trader it will be the sum of capital contributed and retained profits/accumulated losses. With a trust or estate it will be the sum of amounts settled and undistributed profits/accumulated losses. |
Profit and loss statement or statement of financial performance | This shows how much profit or loss was made by the business during the accounting period. |
Revenue | Money received or due to be received from the sale of goods or services and other income sources. |
Share-based remuneration | This is remuneration that involves paying employees by way of shares, options or similar equity or in some cases the cash equivalent. The shares, options etc are typically those of the employer but can also involve a recharge from the parent company, a subsidiary or sister company in respect of their shares/equity being issued or used. |