Glossary

Accruals
Accruals are expenses incurred during the period covered by the accounts which remain unpaid at the end of the period.

Creditor
A lender to whom you owe money.

Current assets
Examples of current assets are cash and balances held in the bank, investments of a short term nature, stock, debts and other amounts owed to the charity.

Current liabilities
Creditors are the opposite of debtors. They represent a liability which has not yet been met. They are included in the accounts at their face value, that is the amount which will actually be paid to the creditor (the person or company who is owed money). They may include bank overdrafts or loans, trade creditors or amounts owed to suppliers, accruals, deferred income and provision.

Debtor
Someone who owes you money.

Deferred income
Income which has been received before the balance sheet date but relates to the following period and is carried forward. An example would be a government grant received shortly before the balance sheet date but intended to fund the charity's activities during its next financial year.

Depreciation
Depreciation means spreading the cost over the time in which the asset is used - the value of a car bought for £8,000 and expected to last for four years would be shown in the accounts as £6,000 after one year, £4,000 after two years, etc. Fixed assets can be revalued either upwards or downwards. Investments, including property, are included in the accounts at market value.

Fixed assets
Fixed assets are usually tangible. Examples of tangible fixed assets are land, freehold property, motor vehicles, furniture and equipment. Tangible fixed assets are usually shown in the balance sheet at what they cost or what they were valued at when they were acquired, less depreciation to date.

Funds
The funds section of the balance sheet indicates how the net assets have been provided. They are divided into unrestricted funds, which include designated funds, and restricted funds.

Investments
Investments are assets held for the income or capital gain that arises directly from them and not used in the charitable activities. Some investments are held for the long term and are included under fixed assets; others are held for the short term and are included under current assets. Examples of investments include shares and property owned for investment purposes.

Liabilities or long-term creditors
Some creditors fall due after one year. This means that there are contractual liabilities which are not payable within the next financial year. An example would the be the balance due on a long-term loan or mortgage.

Net assets
The net assets are calculated by deducting all the liabilities (current creditors and long-term creditors) from the total fixed and current assets.

Net current assets
Net current assets are the current assets minus the current liabilities.