Accounting Glossary
A practical glossary of accounting, e-invoicing, and tax terms for Saudi business owners.
- 110 terms
- 35 categories
- AR / EN Arabic and English
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Clear explanations for the terms you will meet most often.
Accounting
23 terms
- Journal EntryJournal entries step by step: the balancing equation, how to extract 15% VAT from a gross amount, three linked entries covering a complete sales cycle, and how entries differ from the ledger.Accounting
- Chart of AccountsBuild a chart of accounts that works: block numbering logic, a full worked structure for a trading business, the accounts Saudi companies forget, and when opening a new account is the wrong move.Accounting
- Trial BalanceA full worked trial balance, the closing-balance equation, the four errors that leave it perfectly balanced, and a step-by-step VAT reconciliation to run before filing.Accounting
- Cost of Goods SoldHow COGS is calculated step by step, what belongs in it and what doesn't, and a numeric comparison of FIFO and weighted average showing the effect on gross profit.Accounting
- InventoryInventory in numbers: turnover and days-inventory formulas, the lower of cost or net realisable value rule, and a full journal entry for a stocktake variance.Accounting
- Accounts ReceivableReceivables in numbers: the DSO formula, a full ageing schedule, how to calculate a doubtful debt provision, and the journal entry for writing off a bad debt.Accounting
- Accounts PayablePayables in numbers: the DPO formula, a full cash conversion cycle calculation, and how to work out whether an early-payment discount is actually worth taking.Accounting
- Accrued ExpenseAccrued expenses worked through: the period-end adjusting entry, what happens when the real invoice arrives, and the practical difference from a supplier bill including input VAT.Accounting
- Prepaid ExpensePrepaid expenses in full: the payment entry, the monthly release formula, an amortisation schedule for a year's rent, and the effect on both the income statement and balance sheet.Accounting
- Accrual BasisAccrual versus cash basis with a worked example showing how the same month produces two different results, and why accrual is required for statutory financial statements.Accounting
- Cash BasisThe cash basis of accounting explained: how it works, who it genuinely suits, where it misleads, and why it falls short once you are VAT-registered in Saudi Arabia.Accounting
- Opening & Closing BalanceOpening and closing balances: the equation and continuity between them, entering opening balances on system migration - and the opening balance equity trap.Accounting
- ExpenseThe expense defined with its entry, and the four things wrongly recorded as expenses: asset purchases, COGS, owner's drawings, and supplier settlements.Accounting
- Expense ClassificationClassifying expenses by nature and by function, the three common misclassification patterns, and the cap rule for the miscellaneous account.Accounting
- Fixed AssetsFixed assets: what enters capitalised cost, the asset register, net book value, and a complete disposal example with a gain on sale.Accounting
- DepreciationDepreciation: the straight-line formula with a full schedule, the monthly entry, a quick look at declining balance, and why not one riyal leaves.Accounting
- General LedgerThe general ledger: how posting builds it from journal entries, what an account page looks like with an example, and its role as the audit trail's middle layer.Accounting
- Revenue RecognitionRevenue recognition: the governing rule, a four-case table with entries from immediate sale to advance payment, and the twin errors of early and late recognition.Accounting
- Multi-currencyMulti-currency accounting: the functional currency, recording at the transaction date's rate, and a full example of an FX gain on a USD invoice.Accounting
- Exchange RateThe exchange rate: how to choose the source for accounting, the SAR-USD peg's relevance, and the difference between the spot rate and the actual transfer rate.Accounting
- Debit and CreditDebit and credit explained with practical accounting examples: how assets, liabilities, revenue, expenses, and equity increase or decrease in journal entries.Accounting
- Accounting CycleThe accounting cycle explained from source documents and journal entries to ledger posting, trial balance, adjustments, closing, and financial statements.Accounting
- Construction AccountingConstruction accounting explained for projects: job cost, progress billing, advances, retentions, revenue recognition, and a simple worked example.Accounting
Financial reporting
6 terms
- Income StatementA complete worked income statement: gross profit, COGS, margin and break-even equations, why VAT collected is not revenue, and why profit never equals cash.Financial reporting
- Balance SheetThe balance sheet in detail: the expanded accounting equation, a complete worked statement that ties, the owner's current account problem, end-of-service provisions, and six ratios computed from it.Financial reporting
- Cash FlowA complete worked cash flow statement using the indirect method, the three activity types, free cash flow, and a real case where a business earned SAR 27,250 and lost SAR 9,000 of cash.Financial reporting
- Gross ProfitGross profit and gross margin explained, the most common pricing mistake - confusing margin with markup - plus conversion formulas and a worked product-line breakdown.Financial reporting
- Net ProfitNet profit worked through in numbers, why it is not cash, not what the owner can withdraw, and not the zakat base, with a comparison to operating profit and EBITDA.Financial reporting
- Basic ReportsThe five core accounting reports, the single question each one answers, and a monthly half-hour reading routine.Financial reporting
Value Added Tax
8 terms
- Input VATInput VAT in Saudi Arabia: how it is recorded, the conditions for deducting it, what is not deductible, and the error that costs businesses thousands of riyals per return.Value Added Tax
- Output VATOutput VAT in Saudi Arabia: how it is calculated and recorded, when it becomes due, and why treating it as revenue is one of the most damaging errors a small business can make.Value Added Tax
- VAT ReturnThe Saudi VAT return explained: monthly or quarterly, when it is due, a step-by-step reconciliation to run against your books before filing, and how errors are corrected afterwards.Value Added Tax
- Value Added TaxVAT in Saudi Arabia: who actually pays it, a complete numeric example of the tax moving through a supply chain, and the mandatory and voluntary registration thresholds.Value Added Tax
- VAT RateSaudi Arabia's VAT rate: the current rate and its history, the four supply treatments from 15% to out-of-scope, and the add and extract formulas.Value Added Tax
- Tax Identification NumberThe Saudi tax number: how it differs from the commercial registration, where it must appear, and why verifying a supplier's number before paying protects your deduction.Value Added Tax
- Zero-rated SuppliesZero-rated supplies in Saudi Arabia: the main cases, why "taxable at 0%" is not wordplay, and how zero-rating preserves input VAT recovery - with a worked export example.Value Added Tax
- Exempt SuppliesVAT-exempt supplies in Saudi Arabia: the main cases, why exemption turns the tax on your purchases into a final cost, and the apportionment problem in mixed businesses.Value Added Tax
E-invoicing
7 terms
- Tax InvoiceThe Saudi tax invoice explained: mandatory fields, the difference between standard and simplified invoices, Phase 1 and Phase 2 requirements, and why an incomplete invoice costs your customer their deduction.E-invoicing
- Electronic InvoiceThe electronic invoice in Saudi Arabia: the legal meaning, why a scanned invoice or a hand-built PDF doesn't qualify, and what changes between Phase 1 and Phase 2.E-invoicing
- Invoice Numbering & Sequential NumberingInvoice numbering in Saudi Arabia: gapless, non-repeating sequences, multiple series for branches, how to handle a wrong invoice, and the cryptographic chaining Phase 2 added.E-invoicing
- E-invoicing Phases 1 & 2Phase 1 and Phase 2 of Saudi e-invoicing side by side: the dates, the technical requirements, how the wave system works, and how to know your current obligation.E-invoicing
- FatooraZATCA's Fatoora explained: the project versus the platform, the clearance and reporting paths, and the onboarding steps from CSR to production.E-invoicing
- QR CodeThe Saudi e-invoice QR code explained: the five Phase 1 fields, the cryptographic Phase 2 additions, TLV and Base64 encoding, and a worked example.E-invoicing
- E-invoice Formats: XML, PDF/A-3, Embedded XMLThe Phase 2 e-invoice formats: what XML actually is here, why PDF/A-3 specifically, how embedding works, and which file is legally "the invoice."E-invoicing
Systems
3 terms
- Accounting SoftwareWhat accounting software is, what it must do for a Saudi business today, the structural difference from spreadsheets, and a practical selection checklist.Systems
- Invoicing SoftwareInvoicing software versus accounting software: what each covers, when issuing invoices alone is enough, and where the gap surfaces at your first VAT return.Systems
- ERPERP (Enterprise Resource Planning): what it includes, how it differs from accounting software, and when it shifts from unjustified luxury to genuine necessity.Systems
Billing
8 terms
- SubscriptionThe subscription as a pricing model and as accounting: deferred revenue for the seller, prepaid expense for the buyer - one numeric example from both sides.Billing
- Billing CycleThe billing cycle: how its dates are set, and how proration works on a mid-cycle upgrade or cancellation, with a worked calculation.Billing
- Sales InvoiceThe sales invoice: what it creates in the accounts the moment it issues, its lifecycle from draft to collection, and how it relates to the tax invoice.Billing
- Credit NoteThe credit note: the cases that trigger it, its mandatory link to the original invoice, and the complete entry for a goods return including VAT - worked in numbers.Billing
- Debit NoteThe debit note: when it increases a previously issued invoice, its entry and VAT, and the difference between the seller-issued and buyer-issued documents.Billing
- Due DateThe invoice due date: the formula from payment terms, what it drives in ageing and reminders, and how it differs from the invoice date and supply date.Billing
- Payment TermsPayment terms: a table of the common structures from full advance to net 60, how to set terms by customer risk, and where they must be written to bind.Billing
- Invoice StatusInvoice statuses from draft to paid: what each one means, which create accounting effect, and which are pure tracking.Billing
Purchasing
2 terms
- Supplier BillThe supplier bill: why it is recorded on receipt rather than payment, a pre-acceptance checklist, and the three-way match with the purchase order and receiving.Purchasing
- Purchase OrderThe purchase order: a commitment before the expense, and how the three-way match between PO, receiving, and bill works - with an example that catches a difference pre-payment.Purchasing
Sales
1 terms
Documentation
1 terms
Financial documents
2 terms
- Receipt VoucherThe receipt voucher: the full entry, allocating a payment across invoices, the double-counting error of booking it as revenue, and its role in cash control.Financial documents
- Payment VoucherThe payment voucher: the full entry, its path from documented obligation through approval to payment, and the supporting documents that protect you at any review.Financial documents
VAT & compliance
1 terms
Taxes
3 terms
- Withholding TaxSaudi withholding tax: when it applies to your payments to non-residents, the rate table by payment type, a complete worked example including the gross-up trap, and the remittance deadline.Taxes
- ZakatBusiness zakat for Saudi and GCC-owned entities: who it applies to, the zakat base as a distinct concept from net profit, and the annual filing with ZATCA.Taxes
- Corporate Income TaxSaudi corporate income tax: the general 20% rate, non-GCC foreign ownership and joint ventures, and its coexistence with zakat on the same entity.Taxes
Examples
1 terms
Controls
3 terms
- Audit TrailThe audit trail: the unbroken chain linking every report figure to its entry, document, author, and timestamp - where trails break, and how to test yours.Controls
- Account ReconciliationAccount reconciliation: the general principle, plus a full bank reconciliation that explains a book-vs-statement gap line by line, with the adjusting entries.Controls
- Users, Roles, and PermissionsUsers, roles, and permissions in an accounting system: why a shared login is an error, the role-based principle, and ready roles for a small business.Controls
Banking & cash
6 terms
- Bank AccountThe business bank account: why separation from personal is non-negotiable, how it is structured in the chart of accounts, and the case for a separate tax account.Banking & cash
- Bank StatementThe bank statement: its components, why it is the independent witness your books reconcile against, and why it cannot substitute for accounting.Banking & cash
- Bank FeedThe bank feed: how it pulls your account's movements into your accounting system automatically, what it genuinely saves, and what remains your decision.Banking & cash
- Petty CashPetty cash under the imprest system: establishment, spending, and replenishment with complete entries, plus handling a count shortage.Banking & cash
- Card AccountThe company card account: record by transaction not by statement, reconcile the card statement like a bank, and the personal-card dilemma.Banking & cash
- Unmatched TransactionUnmatched transactions in bank reconciliation: diagnosing which of four causes applies, the right treatment for each, and the age rule for suspended items.Banking & cash
Collections
4 terms
- Partial PaymentThe partial payment: its entry and invoice allocation, computing the remainder, and how the unpaid balance is treated in ageing and follow-up.Collections
- Overpayment & UnderpaymentOverpayments and underpayments: the entry for each case, the customer credit balance's two options, and a written tolerance policy for trivial differences.Collections
- CollectionsCollections: the organised process of turning receivables into cash - a timed escalation ladder, the DSO metric, and documenting promises to pay.Collections
- Payment ReminderThe effective payment reminder: its five components, tone progression from friendly to formal, and why pre-due reminders outperform post-due ones.Collections
Management accounting
2 terms
- Cost CenterThe cost centre: the analytical dimension answering "where was it spent?", with a two-branch P&L built from the same accounts.Management accounting
- Cost AllocationAllocating shared costs: a table of allocation bases, a worked rent split across two centres, and the rule against causeless allocation.Management accounting
Periods
3 terms
- Fiscal YearThe fiscal year: definition and choice in Saudi Arabia, the special first year of a new entity, and its link to the annual zakat filing.Periods
- Accounting PeriodThe accounting period: why the year splits into months and quarters, the assign-to-its-period rule, and how it differs from the tax period.Periods
- Period Closing & Closing DatePeriod closing step by step: the complete monthly checklist from reconciliations to lock, monthly versus annual closing, and what the closing date actually does.Periods
Organisational structure
1 terms
Annual revenue
1 terms
Regulation & standards
1 terms
Standards
2 terms
Regulation
2 terms
- Commercial RegistrationSaudi commercial registration: what it is and its number, how it differs from the VAT number, and where it appears in your daily dealings.Regulation
- MISAMISA (Ministry of Investment of Saudi Arabia): its role in licensing foreign investment, and when a non-Saudi investor needs it before the commercial registration.Regulation
HR & compliance
3 terms
- GOSISaudi social insurance (GOSI): what it is, the old and new systems since the 2024 law, applied rates and the wage ceiling, and its effect on employee cost.HR & compliance
- Wages Protection SystemThe Saudi Wages Protection System: how it verifies on-time salary disbursement through the Mudad platform, employer obligations, and the impact of non-compliance.HR & compliance
- NitaqatThe Saudi Nitaqat Saudisation programme: how a business is classified by colour bands, target Saudisation ratios, and each band's effect on incentives and services.HR & compliance
Security
1 terms
Infrastructure
3 terms
- Data Hosting LocationData hosting location for accounting: why the physical server location is a regulatory and operational question, and when Saudi rules require in-Kingdom hosting.Infrastructure
- BackupData backup for accounting: the classic 3-2-1 rule, the difference between backup and sync, and the restore test that exposes a dead backup.Infrastructure
- UptimeUptime explained: what 99% vs 99.9% vs 99.99% actually mean, and the difference between a marketing promise and an SLA-backed commitment.Infrastructure
Invoices and documents
1 terms
Expenses and costs
1 terms
Reporting and analysis
1 terms
Invoicing and sales
1 terms
Payroll and HR
3 terms
- Payroll SheetA payroll sheet explained: basic salary, allowances, deductions, social insurance, net salary, accounting entry, and WPS link.Payroll and HR
- Overtime PayOvertime pay in Saudi Arabia explained with the statutory hourly wage plus 50% basic wage concept, a worked example, and payroll treatment.Payroll and HR
- Salary CertificateA salary certificate explained: employee details, salary components, employer confirmation, bank or visa use cases, and payroll consistency checks.Payroll and HR
Payroll and compliance
2 terms
- Mudad Wages CertificateA Mudad wages certificate explained: employment periods, registered wages, salary certificate differences, and payroll verification issues in Saudi Arabia.Payroll and compliance
- WPS TXT FileA WPS TXT file explained: payroll upload structure, employee fields, net salaries, bank details, and checks before submission.Payroll and compliance
VAT and compliance
1 terms
Zakat and tax
1 terms
Compliance and HR
1 terms
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