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29 Terms Defined

Accounting Glossary

Clear, plain-language definitions of accounting, tax, and bookkeeping terms — with South African context.

Tax & Compliance

Income Tax

Income tax is a direct tax levied by SARS on the taxable income of individuals, companies, and trusts in South Africa, using a progressive rate system for individuals.

Tax & Compliance

IRP5 Certificate

An IRP5 is an employee tax certificate issued by employers in South Africa each tax year, summarising gross remuneration, PAYE deducted, pension contributions, medical aid, and other payroll deductions.

Tax & Compliance

Provisional Tax

Provisional tax is a method of paying income tax in advance, in two or three instalments during the tax year, rather than as a lump sum at year-end.

Tax & Compliance

Taxable Income

Taxable income is the portion of total income on which income tax is calculated, after subtracting all allowable deductions and exemptions as defined by SARS.

Tax & Compliance

Turnover Tax

Turnover tax is a simplified tax system available to South African micro-businesses with a qualifying turnover of R1 million or less per year.

Tax & Compliance

UIF (Unemployment Insurance Fund)

UIF is a South African social security fund that provides short-term financial relief to workers who become unemployed, ill, or on maternity leave. Employee and employer each contribute 1% of remuneration, capped at R17,712 per month.

Accounting Basics

Bank Reconciliation

Bank reconciliation is the process of matching your accounting records against your bank statement to identify discrepancies and ensure your books accurately reflect your actual bank balance.

Accounting Basics

Chart of Accounts

A chart of accounts is a structured list of all the accounts used by a business to classify and record financial transactions in the general ledger.

Accounting Basics

Double-Entry Bookkeeping

Double-entry bookkeeping is an accounting method where every financial transaction is recorded in at least two accounts — a debit in one and a credit in another — ensuring the books always balance.

Accounting Basics

General Ledger

A general ledger is the master accounting record that contains all financial transactions of a business, organised by account, forming the basis for financial statements.

Accounting Basics

Journal Entry

A journal entry is a record of a financial transaction in the accounting system, showing the accounts affected, the amounts debited and credited, and the date of the transaction.

Accounting Basics

Trial Balance

A trial balance is a report listing all accounts in the general ledger with their debit or credit balances, used to verify that total debits equal total credits.

Financial Statements

Balance Sheet

A balance sheet is a financial statement that shows a business's assets, liabilities, and equity at a specific point in time, following the equation: Assets = Liabilities + Equity.

Financial Statements

Cash Flow Statement

A cash flow statement is a financial report that tracks the actual movement of cash in and out of a business over a period, categorised into operating, investing, and financing activities.

Financial Statements

Income Statement

An income statement (also called a profit and loss statement) is a financial report that shows a business's revenues, expenses, and resulting profit or loss over a specific period.

Business Terms

Accounts Payable

Accounts payable (also called creditors) is the money a business owes to its suppliers for goods or services received but not yet paid for.

Business Terms

Accounts Receivable

Accounts receivable (also called debtors) is the money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Business Terms

Credit Note

A credit note is a document issued by a seller to a buyer to reduce the amount owed, typically due to returned goods, overcharging, or an agreed discount after the original invoice was issued.

Business Terms

Invoice

An invoice is a commercial document issued by a seller to a buyer, detailing the products or services provided, quantities, prices, and payment terms.

Assets & Depreciation

Amortization

Amortization is the process of spreading the cost of an intangible asset (such as a patent, trademark, or software licence) over its useful life, similar to depreciation for tangible assets.

Assets & Depreciation

Depreciation

Depreciation is the systematic allocation of a fixed asset's cost over its useful life, reflecting the asset's wear and tear, obsolescence, or decline in value.

Assets & Depreciation

Fixed Asset

A fixed asset (also called a non-current or tangible asset) is a long-term physical asset owned by a business that is used in operations and not intended for sale, such as buildings, vehicles, machinery, or equipment.

Payroll & HR

Cost to Company (CTC)

Cost to company (CTC) is the total amount an employer spends on an employee per year — gross salary plus employer UIF (1%), SDL (1% where applicable), pension, medical aid, and other benefits. It is not the employee's take-home pay.

Payroll & HR

Gross Salary

Gross salary is the total amount an employer pays an employee before any deductions such as PAYE tax, UIF contributions, pension fund contributions, or medical aid.

Payroll & HR

Net Salary

Net salary (also called take-home pay) is the amount an employee receives after all deductions — including PAYE, UIF, pension contributions, and medical aid — have been subtracted from their gross salary.

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