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Terminology and Qualifications Explained
Here are some of the most common terms used in accounting, bookkeeping and financial planning. For a complete glossary visit the Australian Securities and Investments Commission 's consumer website: MoneySmart.gov.au or the Financial Planning Association of Australia
| Designations | |
| Certified Financial Planner (CFP) | A practitioner who has completed rigorous study in financial planning, have extensive industry experience and abide by the FPA Code of Ethics and Rules of Professional Conduct. CFP marks represent the highest professional certification that can be awarded to a financial planner. |
| Certified Public Accountant (CPA) | A finance, accounting and business professional with a specific qualification. They must have: undergraduate degree accredited by CPA Australia, completed the CPA program, completed three years supervised or mentored experience in finance, accounting or business, undertake continuing professional development each year and adhere to a strict code of conduct set by CPA Australia. |
| Certified Bookkeeper | A bookkeeper that is accredited with the Institute of Certified Bookkeepers. Will have FICB, MICB, AICB following their names. These people have proven their competence and experience and follow the Code of Professional Conduct set by the Institute. |
| Terminology | |
| Asset |
Anything owned that has monetary
value. |
| Audit |
Examination of the accounting
and financial documents of a company or firm by an objective
professional. |
| Book Value |
Net value of a company's assets,
less its liabilities and the liquidation prices of its preferred issues. |
| Balance Sheet |
Summary of all the asset,
liability and equity accounts used in a business. |
| Capital Gain
or Loss |
Difference between the sale
price and the purchase price of a capital asset. A positive difference
is a capital gain, a negative difference is a capital loss. |
| Cash Flow
Statement |
A report which shows the flow of
money in and out of a business over a period of time. |
| Cash Flow
Forecast |
A report which estimates the
flow of money in a out of a business over a future period of time. |
| Cooling off
period |
A period which purchasers of a
good or service have the opportunity of deciding not to proceed with
the transaction. |
| Double-entry
bookkeeping |
Every transaction in a
double-entry accounting system has two sides: where the money came from
and where it went to. |
| Equity |
The Value of a person's
ownership in real property or securities; the market value of a
property or business, less all claims and liens upon it. |
| Journal |
Place where your transactions
are first entered. |
| Ledger |
A book in which your entries
from the journal have been stored into separate accounts. |
| Liability |
Any claim against the assets of
a person or corporation |
| Pay as you go
(PAYG) |
System where employers
automatically deduct tax from each employee's gross pay. |
| Posting |
The action of copying entries in
a journal to a ledger. |
| Risk |
Chance that an investor will
lose all or part of an investment. |
| Tax Bracket |
the range of taxable income that
is taxed at a certain rate. |
| Taxable Income |
The amount of income used to
compute tax liability. |
| Trial Balance |
List of each accounts balance. |
| Wealth
Creation |
Term used to mean the strategies
you put in place to create a better financial strategy for yourself in
the future. |
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