Accounting can sometimes feel like a foreign language, full of technical terms and acronyms. But understanding the basics can make managing your business a lot easier — and helps you have more meaningful conversations with your accountant. Here’s a handy glossary of common accounting terms every business owner should know.
Key Terms
Accounts Payable (AP) / Trade Creditors
Money your business owes to suppliers for goods or services you’ve received but not yet paid for.
Accounts Receivable (AR) / Trade Debtors
Money owed to your business by customers who have purchased goods or services on credit.
Assets
Anything your business owns that has value — such as cash, stock, equipment, property, or vehicles.
Liabilities
Debts or obligations your business owes — like loans, credit cards, or unpaid bills.
Equity
The value of the business that belongs to the owners, calculated as assets minus liabilities.
Revenue
The total income earned by your business from sales before expenses are taken out.
Expenses
The costs of running your business, such as rent, wages, insurance, and utilities.
Profit (or Net Profit)
What’s left over after all expenses have been deducted from your revenue.
Cash Flow
The movement of money in and out of your business. Positive cash flow means you have more money coming in than going out.
Balance Sheet
A financial report showing your assets, liabilities, and equity at a specific point in time.
Profit and Loss Statement (P&L)
A financial report showing your income and expenses over a period, usually monthly, quarterly, or yearly.
Depreciation
An accounting method of spreading out the cost of a large asset (like equipment or vehicles) over its useful life.
GST (Goods and Services Tax)
A 10% tax on most goods and services sold in Australia. Businesses registered for GST collect it on sales and claim credits for GST paid on purchases.
BAS (Business Activity Statement)
A form submitted to the ATO (usually quarterly) reporting your GST, PAYG withholding, and other tax obligations.
Why This Matters
You don’t need to be an accountant to run a successful business — but knowing these key terms helps you keep on top of your finances, make better decisions, and stay in control. And when you sit down with your accountant, you’ll be speaking the same language.
