There’s always a risk in a sector like accountancy and bookkeeping that you slip into office lingo or use acronyms too readily when talking to clients. I really try my very best to avoid doing so, but with the best will in the world it still happens from time-to-time. One of the key reasons for trying to avoid using abbreviations and acronyms is I am acutely aware that not everyone will know exactly what they mean and so in a bid to shorten a conversation you inadvertently end up achieving the complete opposite, as you need to loop round and explain the contractions!
Always keen to try and educate, I have been keeping a note of the main terms I use on a regular basis in their abbreviated form and have decided to publish them as a full glossary of bookkeeping with the extended text and my personal explanation as to what they mean. So, whether you’re an existing or future client, please feel free to browse my glossary of bookkeeping (AKA ‘random collection of terminology’, which is presented in no particular order I should add) and let me know if there are any I’ve missed. I will keep updating this regularly as more spring to mind.
PAYE or Pay As Your Earn is the UK income tax system for those on salaries. Effectively, you pay your tax at the point you earn the income. Abbreviation/acronym: PAYE. Long version: Pay as you earn
Flat Rate VAT is a variation of the VAT Scheme, typically used by service companies where they have less purchase VAT and more sales VAT. With Flat Rate VAT, you pay a single flat, lower rate for your sales VAT but cannot reclaim any purchase VAT. Abbreviation/acronym: FRV. Long version: Flat Rate VAT
Otherwise known as ‘The Tax Man’, HMRC collects all taxes, duties and excise on behalf of the UK Treasury. HMRC combines several previously stand alone agencies including HM Inspector of Taxes, the Inland Revenue and HM Customs and Excise. Abbreviation/acronym: HMRC. Long version: Her Majesty’s Revenue and Customs
A Bill of Materials is effectively a list of parts that come together to create another product. Imagine if you will the individual parts that create a car. Each car will have a BOM. If you are ‘exploding a BOM’ in this sense, you are expanding the full list of parts and sub assemblies to see every element. Abbreviation/acronym: BOM. Long version: Bill of Materials
A retail term, BOGOF refers to the idea that you pay full price for one item and get the second item free. There are lots of very similar promotions. From an accounting perspective this is effectively the same as offering half price or 50% off the selling price of each individual item. Abbreviation/acronym: BOGOF. Long version: Buy One Get One Free
A SKU is the (usually) alpha numeric code that refers to an individual item in a stock holding. It may be quite simple, referring to the characteristics of the item TS-WH-SM (a small white T-Shirt) or may refer to where it the item is located in the warehouse, enabling faster pick and pack. Abbreviation/acronym: SKU. Long version: Stock Keeping Unit