A description and explanation of transactions recorded in the journal.
The excess of direct costs allocated to a section of a business over the revenue from that section.
The name given to the amount by which the total purchase price for a business a limited company has taken over is less than the valuation of the assets at that time. The amount is entered at the top of the fixed assets in the balance sheet as a negative amount. Sole traders and partnerships can use this approach instead of a capital reserve.
The amount that remains after all deductions have been made.
Net Book Value (NBV)
The net value of an asset. Equal to its original cost (its book value) minus depreciation and amortisation. Also called net book value and depreciated cost.
Net Current Assets
Current assets minus current liabilities. The figure represents the amount of resources the business has in a form that is readily convertible into cash. Same as working capital.
Refers to the profits of a company after expenses and is calculated as gross profit less operating expenditure.
Where the cost of goods sold plus expenses is greater than the revenue.
Net Present Value (NPV)
The sum of the present values of a series of cash flows.
This is the amount earned by a company after expenses. This is calculated as; Gross Profit - Expenses = Net Profit.
Net Realisable Value
The amount that would be received for the immediate sale of stock, after accounting for any costs associated directly with the sale.
The value of a business as represented by subtracting its liabilities from its assets; Assets - Liabilities = Net Worth. Nominal Account Accounts in which expences, revenue and capital are recorded.
Another name for the General Ledger. This ledger is the core of the accounting process. It is affected by all transactions posted in all ledgers. The balances on all of the nominal accounts form the Trial Balance and therefore the Profit and Loss and the Balance Sheet.
Losses arising in the production process that could not be avoided.