Glossary Accounting Business UK - Glossario Contabilità UK

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Main Ledger

This is where the double-entry takes places of all transactions of the business.

Management Accounting

Management accounting is concerned with the provision and use of accounting information to enable managers of a business in their decision making and management control functions.

The main features of management accounting are that it:
  • Uses accounting information to summarise transactions that have happened already and to make estimates for the future • Looks in detail at the costs - materials, labour and expenses, and the sales income of products and services
  • Looks forward to predict what is likely to happen in the future
  • May use estimates where these are the most useful or suitable form of information
  • Provides management with reports that are of use in running the business or organisation
  • Provides management information as frequently as circumstances demand - speed is often vital as information may go out-of-date very quickly
  • Is not sent to people outside the organisation - it is for internal use
  • Maintains confidentiality of information (e.g. payroll details)


The purchase and sale of a good may be shown as Cost Price + Profit = Selling Price.

The profit when expressed as a fraction, or percentage, of the selling price is known as the margin.

Margin Of Safety The gap between the level of activity at the break-even point and the actual level of activity.

Marginal Cost

Marginal cost is the cost of doing one more thing, e.g. making the 101st widget, when all the set up costs have already been included in the costs of producing the 1st 100 widgets.

Producing 100 widgets costs £200, including all the set up costs of £150 (i.e. £2 per widget) and producing the 101st widget will cost £200.50 in total.

As the first 100 widgets are already produced and the set up costs have already been covered, the marginal cost of producing the 101st widget will be £200.50 - £200 = £0.50 – different from the Average Costs example earlier in the Glossary.

Marginal Costing

An approach to costing that takes account of the variable cost of products rather than the full production cost.

It is particularly useful when considering utilisation of spare capacity.


The purchase and sale of a good may be shown as Cost Price + Profit = Selling Price.

The percentage added to the cost price to provide a profit is known as the mark-up.


The concept that something should only be included in the financial statements if it would be of interest to the stakeholders, i.e. to those people who make use of financial accounting statements.

It need not be material to every stakeholder, but it must be material to a stakeholder before it merits inclusion.

In effect it means 'big enough to bother about'.

For example a £100 error in the petty cash may be very 'material' to a small business but 'immaterial' for a big national company. 

The basic test of materiality is - if the reader of the accounts would form a different opinion if they knew about it, then it is material.

Measurement Basis

The monetary aspects of the items in the financial statements, such as the basis of the stock valuation, say FIFO or LIFO.


Mediation is a well-established process for resolving disagreements in which an impartial third party (the mediator) helps people in dispute to find a mutually acceptable resolution.


A repayable loan secured on property.

The borrower (called the mortgagor) offers up property to the lender (called the mortgagee) as security for a debt.

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