An accountant's role is to record, analyse and monitor a business’ financial workings through a range of financial statements. 


Assets are broken down into two types; current and fixed. Current assets are estimated to be converted into cash within a year. For example, stock that will be sold. Meanwhile, fixed assets are long-term assets that are to be used within the business and are unlikely to be sold within a time period of less than a year. This could be technology, furniture etc that is used in the day to day running of the business.

Balance Sheet

The balance sheet compares a company’s total assets, liabilities and equity of shareholders. This is a calculation of what the business owns, owes and the total investment of its shareholders. It can be used to estimate a business’ Net value.


This is the process of recording and reporting a business’ total financial transactions. 

Business Advisor

A business advisor works to guide business owners on the most effective and efficient practices within their business to help them grow. They can cover a range of areas including human resources, marketing, finances and more.

Cash Flow 


Cash flow refers to the estimated amount of revenue and expense incurred through the business over a period of time. The cash flow is an important document in helping you to identify and react to any upcoming changes whereby you may not be able to meet certain payments. 

Chartered Accountant

A chartered accountant is a professional who has successfully completed and passed the coursework and exams to receive the designation of chartered accountant. This is a worldwide status that shows the individual is qualified to carry out different accounting tasks including managing corporation tax accounts, auditing and consulting businesses. 


Credit figures will be shown on the right column of an accounting entry and it tallies the total transactions coming into the business. I.e insurances and bills. 


Debit figures will be shown on the left column of an accounting entry and it tallies the total transactions coming into the business. I.e sales. 

Financial Accounting

Financial accounting specifically refers to the accounting whereby statements such as balance sheets, profit and loss statements etc are produced and used to advise. Rather than simply analyzing and reporting on business’ transactions and trends alone. 

General Ledger

This document displays the total transactions of a business’ entire lifetime. 

Gross Profit

Gross profit is the total revenue incurred by a business over a period of time before expenses have been deducted. 


There are two types of liabilities; current and long-term. Current liabilities are recurring payments/debts that are due to be paid within the next year. This could include outstanding payments to suppliers and staff wages. Long-term liabilities are payments/debts that are not due to be settled at least until a year in the future. For example, an office mortgage. 


Net Profit

Net profit is the sum of total revenue minus total expenses. This figure shows the business’ overall profit once expenses have been deducted.


Owner’s Equity

This is the total value of a business owned by a shareholder. The total assets in their ownership and investment put into the business by the individual, minus any money that they have withdrawn from the business. This term is only used in balance sheets where the business is registered as a sole trader with one owner. 


Personal Tax Account

This is a relatively new system brought into the UK by HMRC which allows you as an individual to log onto their site, view and make changes to your taxpayer account. It shows the total tax you have paid over the last five years, total income from employment and more. It aims to make managing your information more efficient by reducing the need to be in direct contact with HMRC via phone or email. 

Profit and Loss Account (P&L)

A profit and loss statement identifies the total expenses and costs incurred over a period of time in comparison to the total revenue and income in the same time. This will show whether your business is making a profit or a loss and allows you to make decisions about where your money is coming from and going. 


Return on Investment (ROI)

The return on investment is a measurement of the total money invested into a business or project in regards to the overall financial performance. Essentially, it questions whether or not your efforts have been worthwhile. To calculate this percentage, divide the total Net Profit by the total cash invested. 

Tax Returns

At the end of each financial year, as a business owner you are legally required to submit a tax return. This must be submitted by the following January 31st.  Depending on your registered business type (i.e sole trader, public limited company) this will determine the information required that you must submit. Ultimately your total taxable revenue and expense will be calculated to determine whether you have underpaid or overpaid tax for that year. You will either be given a tax bill if you haven’t paid enough, a tax refund if you have paid too much, or no action will be required if you have paid a fair amount.  


VAT stands for Value Added Tax. This is an additional tax paid to the Government throughout the manufacturing process whereby value is added during the production process. You must register your business to pay VAT if your taxable turnover is greater than £85,000 per annum. 

If you have any further questions on the world of accounting, please do feel free to reach out to the Frasers team. 


Disclaimer: The information above is based on the current circumstances of July 2021. Please do research on any regulation updates in regards to your business’ finances.

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Working with Fraser+ Accountants is a joy. Both Fiona and Joel are extremely patient with me and very efficient. I have total confidence in their ability to deliver.

Rachel Letby, owner of Crail Consulting