Aqid ERPAccounting and tax glossary
Forty-one terms a Saudi business meets, each with its meaning, a worked example and the pages where it is used. In Arabic and English.
A
- Accounting policiesThe specific rules a business chooses for recording and measuring its figures, applied the same way every year.
- Accounts payableWhat the business owes suppliers for bills received and not yet paid; a current liability, matched to orders and deliveries before payment.
- Accounts receivableWhat customers owe the business for invoices issued and not yet paid; a current asset, tracked per customer and by age.
- Accrued expensesCosts already incurred in a period but not yet billed or paid, booked by a month-end entry so the period carries them.
- Adjusting entriesEntries made at the end of a period so income and expenses fall in the period they belong to, not when cash moves.
B
- Balance sheetThe statement of what a business owns, owes and is worth to its owners on one date; assets equal liabilities plus equity.
- Break-even pointThe level of sales at which revenue just covers all costs, fixed and variable, so profit is zero; above it every sale adds profit.
- BudgetA plan in figures for a coming period: the income a business expects to earn and what it expects to spend.
- Business activity (ISIC code)The classified activity a business registers under, by ISIC code; it decides the licences needed, the Nitaqat band and how VAT treats the supply.
C
- Cash flowThe money actually moving in and out of the business in a period, as distinct from the profit the income statement shows.
- Chart of accountsThe numbered list of every account a business records in, grouped as assets, liabilities, equity, income and expenses.
- Commercial registration (CR)The Ministry of Commerce's registration of a business and its ten-digit number, required to trade, open a bank account, register for VAT and hire.
- Cost accountingWorking out what each product, job or project really costs, so prices and decisions rest on numbers, not guesses.
- Cost centerA part of the business whose costs are tracked separately, such as a branch, department or vehicle, to see what it costs to run.
- Cost of salesWhat the goods or services sold in a period cost to buy or produce: materials, direct labour and freight in, not the overheads.
- Credit noteA document that reduces a tax invoice already issued, naming the invoice and the reason; its VAT reduces output tax in the period issued.
D
- Debit and creditThe two sides of every accounting entry: a debit increases assets and expenses, a credit increases liabilities, equity and income.
- Debit noteA document that increases a tax invoice already issued, naming the invoice and the reason; the opposite of a credit note.
- Deferred revenueMoney received from a customer before the goods or service are delivered, held as a liability until earned.
- DepreciationSpreading a fixed asset's cost over the years it is used, as a monthly expense against an accumulated depreciation account.
- DiscountA reduction of the price before VAT: on a line, on the whole document, or for paying early; VAT is charged on what is left.
E
- E-invoiceA tax invoice generated and stored electronically in a structured format under ZATCA's e-invoicing regulation, with a QR code.
- E-invoicing Phase 2 (integration)The phase in which invoices are exchanged with ZATCA as signed XML: standard invoices cleared before issue, simplified ones reported within 24 hours.
- End-of-service benefitThe award the Labour Law owes an employee at the end of employment: half a month's wage per year for five years, a full month after, on the last wage.
- EquityWhat the business owes its owners: total assets less total liabilities, built from capital paid in and profit kept.
F
- Final accountsThe statements a business closes its year with: the income statement, the balance sheet and the notes behind them.
- Financial ratiosFigures from the statements divided by each other to show profitability, liquidity, efficiency and debt at a glance.
- Fixed assetsEquipment, vehicles, furniture and buildings bought to be used for more than a year, carried at cost less depreciation.
G
- General ledgerThe book of accounts: every journal entry regrouped by account, with each account's running balance.
- GOSI contributionsMonthly social insurance on basic salary plus housing: 9.75 percent from a Saudi employee and 11.75 from the employer; 2 percent for an expatriate.
H
- Historical cost principleRecording an asset at what was actually paid for it on the day it was acquired, not at what it might fetch today.
I
- IBANThe 24-character international bank account number every Saudi account has: SA, two check digits, the bank code and the account.
- Income statementThe statement of a period's revenue, the costs set against it, and the profit, down to zakat and the net result.
- InventoryThe goods a business holds to sell or to use in production, carried as a current asset at the lower of cost and net realisable value.
- Inventory countCounting the goods physically on hand and comparing with the system quantity; the approved variance is posted as a stock adjustment at cost.
- Inventory turnoverHow many times a year stock is sold and replaced: cost of sales divided by average inventory.
J
- Journal entriesThe dated record of a transaction as equal debits and credits across accounts, with a reference and a narration saying why.
L
- Liquidity ratiosRatios that show whether a business can pay the bills falling due in the next twelve months from what it holds now.
M
- MudadThe platform through which Saudi employers submit the Wage Protection System file and pay salaries, linked to Qiwa, GOSI and the banks.
P
- Profit marginProfit as a percentage of revenue: gross margin after cost of sales, net margin after everything, each read against the industry's norm.
- ProvisionA liability of uncertain timing or amount recognised now because an obligation already exists, such as end-of-service benefits.
- Purchase orderThe buyer's written order to a supplier: items, quantities, prices, delivery date and place; the first paper of the three-way match.
Q
- QuotationA seller's written offer of items at prices valid to a date; not a tax invoice, and binding on the seller only once accepted within that date.
R
- Retained earningsThe profits a business has earned over the years and kept, rather than paid out to its owners as dividends.
S
- Simplified tax invoiceThe tax invoice for a sale to a consumer, or any supply under SAR 1,000: no buyer details, a QR code instead.
T
- Tax invoiceThe invoice a VAT-registered seller issues to a VAT-registered buyer, with both VAT numbers and VAT per line.
- Trial balanceA list of every ledger account's closing balance, debits in one column and credits in the other, whose totals must be equal.
U
- Unified national number (700)The ten-digit number starting with 7 that identifies an establishment across government: Ministry of Commerce, ZATCA, GOSI, HRSD and Qiwa.
V
- Variance analysisComparing actual results with the budget, line by line, and explaining why each difference arose.
- VAT numberThe 15-digit number ZATCA gives a business registered for VAT; it starts with 3 and ends in 03.
- VAT number verificationChecking on ZATCA's lookup service that a supplier's VAT number is registered before deducting the VAT on their invoice.
W
- Wage Protection System (WPS)The Ministry of Human Resources' system through which employers must pay wages into employees' bank accounts and report them monthly.
- Withholding taxTax a Saudi payer deducts from payments to non-residents for services, rent, royalties and the like, and pays to ZATCA monthly.
- Working capitalCurrent assets less current liabilities: the money tied up in running the business day to day, and the cushion against bills falling due.
Z
- ZakatThe 2.5 percent levy ZATCA assesses on Saudi and GCC-owned businesses, on a base computed from equity and adjusted profit, not on profit alone.
Aqid ERP in Saudi Arabia
Set up for Saudi Arabia's rules from the first day.
- Plans from 79 a month
- ZATCA Phase 2
- VAT 15 %
- GOSI & Mudad WPS
Aqid ERP for Saudi ArabiaPrices in Saudi ArabiaVAT registration in Saudi Arabia: the thresholds, the 30-day deadline and the fineGetting a VAT refund from ZATCA: the credit balance, the request and the bank accountCancelling VAT registration in Saudi Arabia: when you must, when you may, and what follows