Glossary 2018-06-14T01:30:55+00:00

Frequently asked questions and useful information

You can find answers to some of the most frequently asked questions about registering a company, forming a trust, setting up a super fund, placing an order with us and more below. If you can't find an answer to your question, contact us. We'll be happy to help.

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debt 2018-05-23T08:53:06+00:00

that which is owed. If you borrow money, buy something on credit or receive more money on an account than is owed, you have a “debt”.

default 2018-05-23T08:52:41+00:00

to fail to meet an obligation when due, such as paying a debt.

lay-by 2018-05-01T13:27:53+00:00

an arrangement where the customer in a retail store makes a deposit on an article and pays the amount owing in instalments, while the retailer stores the article until the last payment has been made.

leasing finance 2018-05-01T13:29:59+00:00

a method of acquiring business equipment without capital outlay. the bank or finance company buys the equipment and leases it to the customer, in return for regular rental payments for the duration of the lease period.

demand 2018-05-23T08:52:11+00:00

an order to comply with an obligation. In business, paying on “demand” means that the obligation must be satisfied immediately when requested.

lease 2018-05-01T13:28:37+00:00

a legal contract covering the possession and use of property, plant or equipment between the owner (lessor) and another person (lessee) at a given rent, for a stated length of time.

entity 2018-05-23T09:14:43+00:00

an individual (sole trader), partnership, a body corporate, a corporation, an incorporated association or body of persons, a trust or superannuation fund.

franchisee 2018-05-23T09:27:55+00:00

the purchaser of a franchise license who operates one or more outlets of the franchise business.

lessee 2018-05-02T05:01:02+00:00

a person who enters into a lease contract as the user of the land, buildings, plant or equipment.

lessor 2018-05-02T05:02:32+00:00

an owner who allows his/her land, buildings, plant or equipment to be used under a lease contract.

trade credit 2018-05-23T09:46:23+00:00

an arrangement to buy goods or services on account, that is, without making immediate cash payment.

working capital 2018-05-23T10:01:10+00:00

the excess of current assets over current liabilities of any business at any time.

limited partnership 2018-05-02T05:04:00+00:00

a legal partnership where some owners are allowed to assume responsibility only up to the amount invested.

secured 2018-05-23T10:35:10+00:00

protected or guaranteed as in the case of a loan where the lender holds the title of some asset until the borrower has repaid the loan in full.

liquidate 2018-05-02T05:05:36+00:00

to settle a debt or to convert to cash. This literally means to do away with.

service business 2018-05-23T10:34:54+00:00

a business that deals in service activities such as a retailer, tourism business, banking, education provider, etc

liquidator 2018-05-02T05:07:16+00:00

a qualified person appointed by a court to close down a business that is a proprietary company and realise and distribute its assets in payment of its liabilities.

stock control 2018-05-23T10:16:59+00:00

the method of determining how much stock should be held and how much needs to be reordered and when, with the aim of controlling stock holding costs while maintaining efficient operation of the business.

liquidity ratio 2018-05-02T05:09:00+00:00

a comparison of two accounts in a Balance Sheet, current assets divided by current liabilities.

loan 2018-05-02T05:10:14+00:00

money lent at interest. A lender makes a “loan” with the idea that it will be paid back as agreed and that interest will be paid for the use of the money.

loss of profits insurance 2018-05-02T05:11:41+00:00

insurance to cover loss of profits incurred by the policyholder in the event of some calamity overtaking the policyholder’s business, so that trading has to cease.

account 2018-05-01T06:21:14+00:00

a record of a business transaction. When you buy something on credit, the company you are dealing with sets up an “account”. This means it sets up a record of what you buy and what you pay. You will do the same thing with any customers to whom you extend credit.

patent 2018-05-23T10:57:50+00:00

the granting by a government of monopoly rights to the owner of an invention to manufacture and sell it for a certain number of years, conditional on the owner being willing to immediately reveal the ideas incorporated in the invention, so that they can be published for the advancement of knowledge of the general public.

management 2018-05-02T05:14:33+00:00

the role of conducting and supervising a business.

account payee only 2018-05-23T07:02:33+00:00

words often written on crossed cheques, which direct the bank to pay the cheque only to the bank account of the payee.

petty cash 2018-05-23T10:54:24+00:00

a small amount of money kept for minor purchases for the business, which do not warrant writing a cheque.

accountant 2018-05-23T07:02:02+00:00

a qualified person who is skilled at managing and analysing business financial records.

margin 2018-05-02T05:15:29+00:00

the difference between the selling price and the purchase price of an item usually expressed as a percentage of the selling price. Compare mark-up.

accounts receivable 2018-05-23T07:01:33+00:00

a record of what is owed to you. All of the credit “accounts” – the record of what each customer owes you – taken together are your “accounts receivable”.

mark-up 2018-05-02T05:16:26+00:00

the price increase between buying at wholesale and selling at retail often expressed as a percentage of the wholesale or cost price. Compare margin.

posting 2018-05-23T10:54:45+00:00

making entries in an account system or book from original documents such as invoices and receipts.

amortise 2018-05-01T06:32:11+00:00

the gradual process of writing off the cost of an asset, or paying off a liability by means of a sinking fund, over a period of time.

acquisitions 2018-05-28T04:26:45+00:00

in relation to the GST, acquisitions include the things you buy (goods, services and anything else) for your business. They also include many other transactions, such as obtaining advice or information, taking out a lease of business premises or hiring business equipment.

articles of association 2018-05-01T07:01:56+00:00

the basic document of a registered company defining its internal organisation. It is one of two fundamental documents on which the registration of a company is based. See memorandum of association.

merchandising 2018-05-23T11:18:05+00:00

trading in a range of goods. Promoting the whole range of goods that are sold in a business.

asset 2018-05-01T07:01:55+00:00

anything of worth that is owned. The assets of a business are money in the bank, accounts receivable, securities held in the name of the business, property or buildings, equipment, fixtures, merchandise for sale or being made, supplies and all things of value that the business owns.

marketing 2018-05-02T05:18:11+00:00

finding out what customers want, then setting out to meet their needs, provided it can be done at a profit. Marketing includes market research, deciding on products and prices, advertising promoting distributing and selling.

marketing strategy 2018-05-23T11:16:35+00:00

a business’ approach to marketing its products/ services expresses in broad terms, which forms the basis for developing a marketing plan.

Australian Business Number (ABN) 2018-05-23T07:00:33+00:00

an identifier for dealings with the Australian Taxation Office and for future dealings with other government departments and agencies.

Input Taxed 2018-05-23T11:49:54+00:00

some supplies are input taxed, which means you do not charge GST for them but neither are you entitled to input tax credits for anything acquired or imported to make the supply.

accounts payable 2018-05-01T06:27:31+00:00

is money you owe to suppliers and other business creditors as a result of purchases of stock and other expenses such as overheads and taxes.

affidavit 2018-05-01T06:30:16+00:00

a declaration in writing on oath, made before a person legally qualified for the purpose.

marketing plan 2018-05-02T05:32:11+00:00

details of specific tasks worked out by and for a business concerning how market research, product choice and pricing, advertising, promotion and distribution will be done.

Intangible Assets 2018-05-23T11:50:11+00:00

those assets of a business, which cannot be assigned a firm, fixed value, such as leases, franchises, goodwill and patent rights.

Interest 2018-05-23T11:50:50+00:00

the cost of borrowing money.

Inter-firm comparison 2018-05-23T11:50:26+00:00

a comparison between the financial and productive performance of a business with the industry averages.

memorandum of association 2018-05-02T05:40:10+00:00

a legal document that lays down the objects of a registered company and details of the regulation of the company’s business dealings. It is one of the two fundamental documents upon which registration of any company is based. See articles of association.

Inventory 2018-05-23T11:51:19+00:00

the value of all the stock of physical items that a business uses in its production process or has for sale in the ordinary course of doing business.

merchandise 2018-05-02T05:40:52+00:00

goods that may be sold or traded.

Investment 2018-05-23T11:51:37+00:00

money used to purchase any capital items for the business and expected to yield an income.

negative gearing 2018-05-28T04:41:34+00:00

is when an investment is purchased with the assistance of borrowed funds and where the income from that investment (after the deduction of expenses) is less than the interest commitment in the course of a year.

net 2018-05-02T05:56:13+00:00

what is left after deducting all charges (see gross).

Invoice 2018-05-28T04:39:12+00:00

document which shows the customer charges for goods delivered or work done.

net profit 2018-05-23T09:34:51+00:00

the remainder after all expenses of an accounting period are deducted from all revenue of the same period.

net worth 2018-05-23T09:34:39+00:00

the owner/s’ interest in a business, calculated by subtracting all liabilities from the assets of the business.

Invoice Financing 2018-05-23T11:52:09+00:00

see factoring

authorised capital 2018-05-01T07:04:53+00:00

the total amount of capital which a company, by its memorandum of association, is authorised to offer for subscription. See also, paid up capital.

award 2018-05-01T07:06:50+00:00

an agreement having the force of law, which sets out working conditions and wages for certain types of employment.

niche 2018-05-02T06:03:11+00:00

a small specialised segment of a total market.

bad debts 2018-05-28T04:28:29+00:00

money owed to you that you can’t collect.

balance sheet 2018-05-01T07:31:59+00:00

an important business document that shows what a business owns and owes as of the date shown. Essentially a “balance sheet” is a list of business assets and their cost on one side and a list of liabilities and owners’ equity (investment in the business) on the other side with the amount for each. The liabilities include all that the business owes.

not negotiable 2018-05-02T06:05:20+00:00

words often written on crossed cheques, which do not prevent the cheque from being transferred. See account payee only.

balance 2018-05-01T07:29:52+00:00

the amount of money remaining in an account. The total of your money in the bank after accounting for all transactions (deposits and withdrawals) is called a “balance”.

bank draft 2018-05-23T07:12:08+00:00

a written instruction to a bank’s agent to pay a sum of money to the person specified on the draft. A safe and convenient way of remitting money overseas.

official receiver 2018-05-28T04:42:53+00:00

a person appointed to investigate and manage the affairs of a company in receivership.

operating expense 2018-05-02T06:14:34+00:00

all the expenses normally incurred in running a business, during an accounting period, excluding the cost of goods sold.

option 2018-05-02T06:16:15+00:00

an agreement, often for a consideration, which permits the purchase or sale of something within a stipulated time, in accordance with the terms of the agreement. For example, a right by a tenant to take up a further lease of premises, usually under conditions outlined in the original lease.

overhead 2018-05-02T06:18:37+00:00

expenses which are incurred in producing a commodity or rendering a service, but which cannot conveniently be attributed to individual units of production or service. Examples are heating, lighting etc.

overdraft 2018-05-02T06:17:21+00:00

a form of loan by which a person with a trading bank current account is given permission to continue making drawings on the account up to an agreed limit, after the balance has been reduced to nil.

bank reconciliation 2018-05-01T08:43:14+00:00

a comparison between the bank’s record of transactions and the record of the firm’s cash book. After taking into account such items as unpresented cheques and bank charges etc., the two records should show an identical balance.

bankrupt 2018-05-01T08:44:40+00:00

a debtor, who has volunteered or been forced to appear before a Bankruptcy Court and has been judged insolvent, because s/he has insufficient assets to meet the demands of all creditors.

paid-up-capital 2018-05-02T06:36:45+00:00

the total capital of a company. It comprises both shares issued for cash or for acquisition of assets and bonus shares.

bill of sale 2018-05-01T08:46:31+00:00

a document under seal, which formally transfers ownership of property specified in the document from the borrower to the lender, until such time as the debt has been paid in full.

bond 2018-05-01T08:47:02+00:00

payment by a tenant to a landlord before the tenant takes over the premises and from which the landlord may be able to deduct arrears of rent or the cost of rectifying damage.

bridging loan 2018-05-01T08:49:08+00:00

a loan to provide short-term finance, usually to buy property or land, where the loan is to be cleared by longer-term borrowing, or the sale of assets.

bookkeeping 2018-05-01T08:47:58+00:00

the process of recording business transactions in the accounting records

budget 2018-05-01T08:52:56+00:00

an estimate of expenses and revenue required.

partnership 2018-05-28T04:44:19+00:00

a legal business relationship of two or more people who share responsibilities, resources, profits, and liabilities.

Business Activity Statement 2018-05-01T08:55:21+00:00

a single form used to report business tax entitlements and obligations, including the amount of GST payable and your input tax credits.

Pay As You Go (PAYG) instalments 2018-05-02T06:54:55+00:00

are the amounts you pay directly to the Commissioner of Taxation to meet your income tax and other liabilities and are usually paid each quarter.

business name 2018-05-01T08:55:42+00:00

the name of a business officially listed in the state or territory Register of Business Names.

capital 2018-05-23T07:28:18+00:00

the total owned and borrowed funds in a business.

capital gain 2018-05-23T07:29:06+00:00

a financial gain made from selling fixed assets such as land, buildings, or a business at a price above the original purchase price.

cash 2018-05-23T07:37:35+00:00

includes all money in the bank, in the cash drawer and in petty cash. Banknotes, coins, bills and negotiable securities (like cheques) is cash. But so is the money you can draw on demand – your bank accounts or savings accounts also represent “cash”.

payable 2018-05-02T07:12:59+00:00

ready to be paid.

cash book 2018-05-23T07:37:45+00:00

a record of cash payments and receipts, showing these under various categories.

capital requirement 2018-05-23T07:29:22+00:00

a list of expenses that must be met to establish a business. Even before a business is started, the owner should start keeping records.

payee 2018-05-28T04:45:47+00:00

person to whom money is paid.

personal assets 2018-05-02T07:16:07+00:00

the money you have in the bank, whatever is owed to you, any securities (shares) that you own, the property you own, whatever part of your home that you own, your furniture and appliances and all the miscellaneous things that you personally own.

personnel 2018-05-02T07:17:08+00:00

persons collectively in the employ of a business.

co-signers 2018-05-23T08:37:23+00:00

people whom together share responsibility on behalf of a business by jointly signing documents or cheques.

power of attorney 2018-05-23T10:56:44+00:00

power to act on behalf of another person for specified purposes.

cash discount 2018-05-23T07:40:52+00:00

a deduction that is given for prompt payment of a bill.

premium 2018-05-02T07:19:48+00:00

consideration paid for an insurance policy.

cash flow 2018-05-23T07:42:24+00:00

the flow of internal funds generated within the business as a result of receipts from debtors, payments to creditors, drawings and cash sales.

principal 2018-05-02T07:20:44+00:00

in the case of a loan, refers to the actual amount borrowed and on which interest is paid.

cash receipts 2018-05-28T04:29:57+00:00

the money received by a business from customers.

pro rata 2018-05-02T07:22:14+00:00

in proportion.

collateral 2018-05-23T07:43:38+00:00

security provided by a borrower to cover the possibility that the loan will not be repaid.

company 2018-05-23T07:43:52+00:00

a business owned by a group of people called shareholders, which has its own legal identity separate from its owners.

profit 2018-05-02T07:23:40+00:00

total revenue less total expenses for a period of time calculated in accordance with generally accepted accounting principles.

consumer price index (CPI) 2018-05-23T07:44:07+00:00

a measure of the aggregate rise or fall in prices of commonly used goods and services, published by the Commonwealth Government as a basis, among other things, for deciding what overall increases should be made to wages and salaries.

profit and loss statement 2018-05-02T07:24:54+00:00

statement of revenue and expenses showing the profit or loss for a certain period of time.

profit margin 2018-05-02T07:25:40+00:00

the amount that the price of a product or service is raised above its cost in order to provide a gross profit.

projection 2018-05-02T07:26:55+00:00

a forecast of future trends in the operation of a business.

proprietary company 2018-05-02T07:27:45+00:00

a business which is owned by not less than two persons and not more than 50 persons and which restricts the right of the shareholders to transfer shares. Such a business is a separate legal entity and must use the words Proprietary Limited (Pty Ltd) after it name.

contingent liability 2018-05-23T07:44:26+00:00

a liability which will only arise upon the happening of a certain event, for example, the guarantor of a loan being asked to honour the guarantee if the borrower defaults.

proprietorship 2018-05-02T07:28:11+00:00

the value of the proprietor’s assets in a business less any external liabilities.

contract 2018-05-23T07:44:42+00:00

a legally binding agreement between two or more parties.

controllable expenses 2018-05-01T09:24:05+00:00

those expenses that can be controlled or restrained by the businessperson.

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copyright 2018-05-01T09:24:59+00:00

a type of property right which protects the expression of ideas such as literary or dramatic works, television productions, drawings etc., from being used for commercial gain without permission of the copyright owner. Registration is not a prerequisite for protection.

receipt 2018-05-28T04:48:08+00:00

a written acknowledgement of having received money or goods specified.

cost of goods sold 2018-05-01T09:26:20+00:00

the total cost to the business of the goods sold during an accounting period. In its simplest form this is the sum of the opening stock plus all purchases less the closing stock.

receivership 2018-05-02T07:35:16+00:00

the legal condition a company is placed in when an official receiver is appointed to investigate and manage its affairs.

residual 2018-05-02T07:37:08+00:00

the pre-agreed estimated value at the end of a leasing period of an item subject to a leasing agreement.

retail 2018-05-02T07:38:01+00:00

to sell directly to the consumer, usually in small quantities in comparison with the total level of sales.

cover note 2018-05-23T07:45:52+00:00

a temporary certificate of insurance issued by an insurance company to give immediate insurance cover until a formal document is prepared and issued.

return on investment (ROI) 2018-05-02T07:38:58+00:00

the ratio of net profit after income tax, over owner’s equity. Usually expressed as a percentage.

credit 2018-05-23T07:46:51+00:00

an entry made on the right hand side of an account and indicating a gain to a liability, owner’s equity or revenue account.

right of assignment 2018-05-02T07:39:47+00:00

in relation to business premises, a right given in the lease agreement for a tenant to assign the lease to another tenant when the business is sold.

credit application 2018-05-01T09:29:21+00:00

a form to be completed by an applicant for a credit account, giving sufficient details to allow the seller to establish the applicant’s creditworthiness.

rocket registrations 2018-05-02T07:40:22+00:00

your online company, trust and superannuation fund registration provider.

credit control 2018-05-23T07:47:38+00:00

any policy designed to increase or decrease credit.

credit limit 2018-05-23T07:47:52+00:00

the upper limit of credit that a business will allow a customer to have.

creditor 2018-05-23T07:48:09+00:00

a person or business to whom money is owed.

sales 2018-05-02T07:44:20+00:00

the total value of goods sold or revenue from services rendered.

current assets 2018-05-01T09:40:34+00:00

includes cash, short-term deposits, customers’ accounts, stock (includes work in progress, raw materials and finished goods), that will be converted into cash during the normal course of business, within a year.

current liabilities 2018-05-01T09:41:00+00:00

short-term debts such as bank overdraft, creditors and provisions set aside to pay taxation and other commitments (for example, holiday or long service leave) and expected to come due within one year of the Balance Sheet.

sole trader 2018-05-23T10:34:25+00:00

a person who trades by himself/herself without the use of a company structure or partners and bears alone full responsibility for the actions of the business.

solvent 2018-05-23T10:34:01+00:00

the condition of a business when all debts can be paid as they come due.

stock 2018-05-23T10:32:57+00:00

physical items (inventory) that a business uses in its production process or has for sale in the ordinary course of doing business.

supply 2018-05-23T10:30:42+00:00

for GST purposes, supply is defined as:

  • a supply is any form of supply and includes:
    • supply of goods and services;
    • provision of advice or information;
    • a grant, assignment or surrender of real property;
    • a creation, grant transfer, assignment or surrender of any right;
    • a financial supply; and
    • entry into or release from an obligation to do anything, to refrain from an act or to tolerate an act or situation.
supplies 2018-05-23T10:07:59+00:00

in relation to the GST, supplies include the goods and services you sell through your enterprise and many other transactions such as providing advice or information, leasing out commercial premises or providing hire equipment.

debenture 2018-05-28T04:31:42+00:00

a fixed interest investment in a company, which has priority for interest payments, generally redeemable after the lapse of a specified time.

stock turnover 2018-05-23T10:07:40+00:00

the method of determining how much stock should be held and how much needs to be reordered and when, with the aim of controlling stock holding costs while maintaining efficient operation of the business.

debit 2018-05-23T08:39:31+00:00

To debit is to place an entry on the left-hand side of an account. A debit in a liability account makes it smaller. A debit in an asset account makes it larger.

debt capital 2018-05-23T08:40:51+00:00

money from external sources used to finance a business. See also equity capital.

debtor 2018-05-28T04:33:29+00:00

a person or business who owes money.

depreciation expense 2018-05-23T08:43:10+00:00

gradual reduction of the value of a fixed asset and gradual application of this cost to the expenses of a business over the useful life of the asset.

depreciation schedule 2018-05-23T08:43:26+00:00

a table showing depreciable assets, the year each was purchased, its cost, the percentage by which it is depreciated each year and written down current value.

direct costs 2018-05-23T08:43:45+00:00

the costs incurred, in addition to fixed costs, as a result of manufacturing a product or providing a service. Direct costs are made up of direct material, direct labour and direct manufacturing or servicing costs.

stock at valuation (SAV) 2018-05-02T08:52:15+00:00

stock valued at wholesale or cost price.

tangible asset 2018-05-02T08:53:42+00:00

something substantial or real that is capable of being given an actual or approximate value.

tax invoice 2018-05-02T08:55:18+00:00

a document generally issued by the supplier. It shows the price of a supply, indicating whether it includes GST, and may show the amount of GST. It must show other information, including the ABN of the supplier. You must have a tax invoice before you can claim an input tax credit on your activity statement (except for purchases of $50 or less).

tender 2018-05-02T08:56:34+00:00

an offer in writing to carry out work, which has been specified by another person. The offer quotes a fixed price, which will be charged for doing the work.

term loan 2018-06-04T02:16:18+00:00

a loan for a fixed period of more than one year and repayable by regular instalments.

director’s guarantee 2018-05-01T10:19:28+00:00

a personal guarantee given by a director of a company that s/he will be personally responsible for a debt or other liability of the company. Usually requested in credit applications, leases, loans and hire purchase agreements.

disbursements 2018-05-01T10:20:37+00:00

funds paid out of a business in settlement of obligations.

trade discount 2018-05-02T08:58:53+00:00

an allowance made by a seller to a buyer at the time of purchase, for the deduction of a percentage of the price, provided the payment is made within agreed terms.

discount 2018-05-01T10:21:40+00:00

a deduction made from the normal cost or purchase price.

dishonoured 2018-05-01T10:22:39+00:00

the word used to describe a cheque, which the bank will not pay, because the customer’s account lacks sufficient funds.

trade mark 2018-05-02T08:59:42+00:00

can be a letter, number, word, phrase, sound, smell, shape, logo, picture, aspect of packaging or any combination of these, which is used to distinguish goods and / or services of one trader from those of another

trial balance 2018-05-02T09:00:57+00:00

a list of all balances in the ledger at a given time.

dividend 2018-05-01T10:24:34+00:00

a distribution of the profits of a company among its members or shareholders.

undercapitalisation 2018-05-02T09:03:29+00:00

insufficient investment of funds in a business.

unsecured loan 2018-05-02T09:04:30+00:00

a loan that is not backed up by any collateral, such as a home or an automobile offered as security.

drawings 2018-05-01T10:26:14+00:00

withdrawals of assets (usually cash) from a business by a sole proprietor or a partner.

valuation 2018-05-02T09:06:52+00:00

the process of appraising the worth of property according to some recognised criteria.

vendor 2018-05-02T09:08:22+00:00

a seller of goods or of a business.

volume 2018-05-02T09:10:21+00:00

an amount or quantity of business activity.

variable costs 2018-05-02T09:07:44+00:00

the costs additional to fixed costs of running a business, that can vary depending on the level of demand and activity.

entrepreneur 2018-05-01T10:45:16+00:00

a person who organises and manages a business, but usually only applied to people who have shown exceptional ability and imagination in launching and succeeding with new business ventures.

equities 2018-05-23T08:56:16+00:00

stocks and shares invested in a business and not bearing fixed interest.

venture capital 2018-05-28T04:49:34+00:00

capital invested in a business where the chances of success are uncertain.

equity capital 2018-05-23T08:56:30+00:00

money provided by the business owner/s to finance the business.

expenses 2018-05-01T10:50:21+00:00

costs incurred by a business in earning income, for example, rent, advertising, wages etc.

walk in, walk out (WIWO) 2018-05-02T09:12:25+00:00

an expression normally used in its abbreviated form, regarding a business for sale. It indicates that the business is for sale as a going concern and may be purchased without interruption to trading.

wholesale 2018-05-02T09:17:16+00:00

selling in large quantities to businesses which will then resell to consumers in smaller quantities

workers’ compensation 2018-05-02T09:18:01+00:00

money paid to an employee to compensate for injuries received in connection with their work. All employers must insure against claims for this kind of compensation.

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factoring 2018-05-01T11:14:42+00:00

involves the cash purchase of a business’ sales invoices at a discount, after which, the factoring company collects the invoiced amounts from the business’ customers. Factoring is used where the business needs immediate cash.

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feasibility study 2018-05-01T11:16:56+00:00

an examination of a particular project or business to assess its chances of operating successfully, before committing large amounts of money to it.

finance 2018-05-28T04:36:44+00:00

money resources.

financial statements 2018-05-01T11:20:22+00:00

formal reports prepared from accounting records describing the financial position and performance of the business.

financial year 2018-05-01T11:24:01+00:00

an accounting period of 12 months, often coincident, for convenience, with the fiscal year (1 July to 30 June).

financing 2018-05-01T11:26:41+00:00

obtaining money resources. Businesses usually have to obtain finance at some time, either to go into business or expand operations.

fixed assets 2018-05-01T11:36:13+00:00

the land, buildings, vehicles, materials and equipment owned by a business, which are used to earn revenue rather than being for sale.

fixed costs 2018-05-01T11:41:07+00:00

costs, which are incurred by a business whether it is operating to generate income or not and which do not necessarily increase or decrease as a total volume of production, increases or decreases. Rent, for example, must be paid whether or not any business is accomplished.

franchise 2018-05-01T13:01:48+00:00

a business arrangement in which knowledge, expertise and often a trade mark or trade name are licensed to an operator, generally for an initial fee and a yearly payment.

franchisor 2018-05-28T04:37:15+00:00

the owner of a franchise system.

gearing 2018-05-01T13:05:52+00:00

the ratio between the business’s debt and equity finance.

goodwill 2018-05-01T13:06:48+00:00

the excess price asked for the sale of a business over the value of its physical assets; an intangible asset, the price of which represents a payment for the existing client base and future profits.

gross 2018-05-01T13:07:30+00:00

the total overall amount. For example, gross profit is the trading profit of a business without any deductions for business expenses.

gross profit 2018-05-01T13:08:10+00:00

the excess of net sales over cost of goods sold usually expressed as a percentage.

GST-free 2018-05-01T13:09:30+00:00

some supplies are GST-free, which means you do not charge GST for them but you are entitled to claim input tax credits for anything acquired or imported to use in your business.

hire purchase 2018-05-01T13:13:07+00:00

system for financing the purchase of plant and equipment, where the ownership is vested with the lender until the final payment is made. The borrower is required to place a deposit and make periodic (usually monthly) repayments at a flat rate of interest.

income 2018-05-23T11:48:48+00:00

money that is being earned by the business.

income statement 2018-05-01T13:16:12+00:00

a financial document that shows how much money (sales) came in and how much money (costs) was paid out. Subtracting the costs from the sales gives you your profit and all three are shown on the income statement.

induction training 2018-05-01T13:19:05+00:00

training for new employees regarding conditions of service, physical layout of the workplace, safety rules, local conventions and customs and supervisory procedures.

input tax credits 2018-05-01T13:19:56+00:00

you are entitled to an input tax credit for the GST included in the price you pay for an acquisition or the GST paid for an importation if it is for use in your enterprise.

indemnity insurance 2018-05-28T04:40:06+00:00

risk protection for actions for which a business is liable. Insurance that a business carries to cover the possibility of loss from lawsuits in the event the business or its agents were found at fault when an action occurred.

Audit 2018-05-23T07:00:03+00:00

detailed checking of the financial records of a business by an independent qualified person (auditor) in order to verify their correctness or to detect errors or fraud.

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