Cutting The Jargon: Finance Acronyms & Key Terminology Explained
Photo by Amador Loureiro on Unsplash
For our Accela Finance clients, our mission is to simplify the often complicated and confusing financial processes that may feel overwhelming. Particularly if you’re starting your own company or just learning about the ins and outs of operating in Singapore, it can be a lot to wrap your head around - LLP, ACRA, GST, etc.!
In this post, we’re doing a deep dive into the main acronyms our team uses day to day to help demystify the world of finance jargon. Read on to get to know your ABCs of Accela Finance…
Annual Filings
Under the Companies Act, all Singapore-incorporated companies are required to file annual returns to ensure that the company’s information on ACRA’s register is up to date. Did we lose you at ACRA? Keep reading for more important acronyms related to annual filing…
ACRA = Accounting & Corporate Regulatory Authority, the regulator of business registration, financial reporting, public accountants and corporate service providers
AFS = Annual Financial Statements, a summary of financial performance which businesses are required to prepare each year.
AGM = Annual General Meeting, a gathering of shareholders, during which the financial statements are presented. It doesn't need to be formal, around a coffee table is fine if there are only two shareholders!
GAAP = Generally Accepted Accounting Principles, a set of accounting rules by the Financial Accounting Standards Board (FASB)
IFRS = International Financial Reporting Standards, a set of accounting standards that govern how particular types of transactions and events should be reported in financial statements.
RORC = Register of Registrable Controllers, a register that all companies, domestic and foreign, and limited liability partnerships (LLPs) are required to keep of members who:
Hold at least 25% of share capital
Have at least 25% of voting rights
Can exercise significant influence over the company or LLP
YA = Year of Assessment / Year, for example, YA2022 is the financial period ending in 2021, which is taxed in 2022; YA2023 is the financial period ending in 2022, which is taxed in 2023
XBRL = eXtensible Business Reporting Language, a format for presenting financial statements which can be uploaded to the ACRA portal.
Payroll
Payroll in Singapore incorporates different calculations and reporting elements - this is something Accela Finance can handle for clients from start to finish, with straightforward delivery and pricing. The main elements of payroll to get to know are below…
AW Ceiling = Additional Wage Ceiling, the maximum amount which CPF contributions can be paid on (per calendar year)
CPF = Central Provident Fund, the government body responsible for collecting CPF, SDL and SHG contributions.
SDL + Skills Development Levy, an additional cost to a business which is paid over to the CPF Board and is used to support programmes which improve the skills of the workforce in Singapore.
SHG = Self Help Group, funds that were set up to help low-income households and the less privileged, in the Chinese, Eurasian, Muslim, and Indian communities in Singapore. Depending on race or religion, Singaporean and Permanent Resident employees, and some on work passes, are required to pay into these funds from their wages.
In the numbers
Still have questions? The below terminology is used frequently in the finance world, in everything from tax filings to mergers and acquisitions (M&A).
Accrued Revenue or Accrued Expenditure = Income or expenses that belong to a certain period but are invoiced after. For example, a phone bill might cover the period from 16th July 2022 to 15th August 2022; in your July accounts you should accrue the cost from 16th July to 31st July
Capital Allowances = Deductions from tax that are claimable for the wear and tear of qualifying fixed assets
CAPEX = Capital Expenditure, typically one-time large purchases of fixed assets that will be used for revenue generation over a longer period
COGS = Cost Of Goods Sold, purchases which correspond directly to sales
EBITDA = Earnings Before Interest, Tax, Depreciation and Amortisation, EBITDA is a commonly used measure of underlying profitability
GL = General Ledger, a report which shows every transaction that makes up a figure in the financial statements
Revenue Expenditure = Ongoing operating expenses, which are short-term expenses used to run the daily business operations
ROI = Return On Investment, a measure of profitability.
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Accela Finance provides expertise to help modern businesses simplify complex work. Get in touch to see how we can help you and your business: [email protected].