Final Accounting Terms
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| Limited Liability | Means that liability of the owners is confined to the amount they invested in the company. It is protection against total loss of private assets
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| Ltd | Limited, the reason to have this in your business name is to ensure creditors are aware that the shareholders' liability is limited to their share value. Maximun 99 shareholders.
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| plc | Public Limited Company, shares are bought publicly and sold publicly on the stock exchange eg ISEQ or Dow Jones.
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| Share Capital | Amount invested by the owners of the firm.
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| Authorised Share Capital | Total number of shares a company can sell as set out when the company is formed in the Memorandum of Association. (Also known as nominal share capital)
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| Issued Share Capital | The actual amount of authorised share capital sold/issued.
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| Share Premium | When a company issues shares for the first time above their nominal value.
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| Dividend | The reward the shareholders get for their investment, it is a portion of the profits.
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| Interim Dividend | Dividends paid out during the year
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| Reserves | Reserves of money belong to the ordinary shareholders and are part of shareholders' funds.
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| Capital Reserves | Non-trading profits earned in some other way eg throught share premiumns or revaluations, these reserves cannot be used to pay dividends
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| Revenue Reserves | Profits retained by the company, eg general reseves, P&L reserve, debendture redemption reserve, these reserves can be used to pay dividends.
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| Shareholders' Funds | Amount owed by the company to ordinary shareholders.
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| Debentures | Long term loans carrying a fixed interest rate, the debenture is repaid in one lump sum, and in the meantime interest is paid annually.
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| Debenture Redemption Reserve | Prudent companies transfer a portion of thier annual profit into this reserve, so that when the loan is due to repaid in one lump sum, the funds are available.
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| Preliminary/Formation Expenses | Expenses incurred in the formation of the company, treated as admin expenses.
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| Auditor's Remuneration | Fee paid to the auditor for carrying out the audit of the comapny, treated as admin expense.
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| Directors' Remuneration | The fee, salaries and commission paid by the company to their directors for the accounting period.
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| Corporation Tax | Tax paid on company's profits, deducted from NP.
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| Intangible fixed asset | Items of value but do not have a physical resence, however, they are able to be sold, eg goodwill and patents.
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| Financial fixed assets | Long-term investments made by a business and loans given to other parties eg quoted investments (bought and sold on stock exchange)and unquoted investments.
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| Operating Profit | Profit calculated after taking away all operating expenses and adding other operating income, it is the profit before any interest is deducted.
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| Profit & Loss Balance | The company's retained profit is added to the profit and loss account(reserves) balance from the previous year.
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| Selling and Distribution Expenses | Any expense incurred in selling of goods and sevices eg carraige out
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| Administration Expenses | Any expense incurred in the running of the office and upkeep of permises (excluding any manufacturing expenses in manufacturing businesses)
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| Interest | Financial expense on the debenture loan paid annually.
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| Amortisation | The writing down in value of a intangible fixed asset over a number of years eg Patents and Goodwill
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