Most people running a business never trained as bookkeepers, yet the words used in accounting can make you feel like you missed a lesson everyone else got. You did not. Here are the terms that matter, explained the way they should have been in the first place.
Start here, because everything else builds on it. Income is money coming into your business. Expenses are the costs of running it. Your profit is simply income minus expenses, and profit is what you are usually taxed on, not the total that landed in your account.
This is the pair that scares people off, and it should not. In bookkeeping, every transaction has two sides, so the books always balance. Loosely, a debit records where money or value goes to, and a credit records where it comes from.
When you buy a £120 laptop stand, the value goes into your equipment, that is the debit, and it comes out of your bank account, that is the credit. You do not need to think in debits and credits day to day. Good software handles it. But now the words will not throw you.
A journal entry is just the record of one transaction, showing both sides so it balances. Think of it as the sentence "I spent this, from here, on that", written in the language accountants use.
A chart of accounts is the list of categories your income and spending get sorted into, such as sales, software, rent and travel. It is like the labelled folders your money gets filed into so your reports make sense.
Reconciliation, or bank rec, sounds technical and means something very ordinary: checking that the transactions in your records match what actually happened in your bank account. It is you making sure nothing is missing or counted twice. That is all.
VAT, or Value Added Tax, is a tax added to most goods and services in the UK, usually at 20 percent. If your business is VAT registered, you charge VAT on your sales, you can usually reclaim VAT on your costs, and you send the difference to HMRC. "Net" means the amount before VAT, and "gross" means the amount including VAT.
These two come up once your books get more serious. An accrual records a cost or income when it is earned or incurred, even if the money has not moved yet. A prepayment spreads a cost you paid up front, like an annual bill, across the months it actually covers, so your figures are not lumpy. You do not need to master these to keep clean books, and again, software can do the heavy lifting.
Bookkeeping is not hard, it is just wrapped in unfamiliar words. Once you strip the jargon away, it is a simple idea: record what comes in, record what goes out, keep it tidy, and you always know where you stand.
That is the whole reason Berified exists. Instead of learning this vocabulary, you describe what happened in plain English and Berified writes the correct bookkeeping behind the scenes, debits, credits, VAT and all.
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This article is general information, not financial or tax advice. For your own situation, speak to a qualified accountant.
Berified turns plain English into proper bookkeeping, so you stay MTD-ready without the jargon.
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