Glossary of annual accounts: 55 terms from A to Z

From assets to receivables: the terms you come across when preparing annual accounts, explained in plain language. Each explanation is one or two sentences, with a reference to where you read more about it.

Balance sheet

The balance sheet shows what you own and owe at one moment in time. Both sides are always equal.

Balance sheet: Overview of the assets (activa) and the liabilities plus equity (passiva) at the balance sheet date. Preparing a balance sheet →
Assets (activa): The things you own: fixed assets, inventories, receivables and cash and cash equivalents.
Liabilities and equity (passiva): The equity, the provisions and the liabilities.
Fixed assets: Assets that last longer than a year, such as premises, machinery, furniture or a company car.
Current assets: Assets that become money within a year: inventories, receivables and cash and cash equivalents.
Trade receivables (debiteuren): Customers who still have to pay you. Irrecoverable receivables →
Trade payables (crediteuren): Suppliers whom you still have to pay.
Depreciation (afschrijving): Spreading the cost of a business asset over the years you use it. It also reduces the carrying amount on the balance sheet. Calculating depreciation →
Carrying amount (boekwaarde): The purchase price of a business asset minus the depreciation to date.
Provision (voorziening): An amount on the balance sheet for an obligation whose size or timing is still uncertain, for example a pension or warranty obligation. Example: irrecoverable receivables →
Working capital: Current assets minus short-term liabilities: the money you have at your disposal in the short term.
Balance sheet date: The date on which the balance sheet is prepared, usually 31 December.

Profit and loss

The profit and loss account sets the income of a period against the expenses of that same period.

Profit and loss account (winst-en-verliesrekening): Overview of the income and the expenses for the financial year. Profit and loss account →
Turnover (omzet): The income from goods or services supplied, excluding VAT. VAT you receive is not turnover.
Cost of sales (inkoopwaarde van de omzet): What the goods you have sold cost you. Valuing inventory →
Gross margin (brutomarge): Turnover minus the cost of sales: what remains before the operating expenses.
Operating result (bedrijfsresultaat): The gross margin minus the operating expenses (staff, premises, transport, depreciation and other costs).
Result (resultaat): The profit or loss that remains after all income and expenses, including financial income and expenses and (for a BV) the corporation tax.
Costs: Expenditure charged to the result in this financial year.
Investment: An expenditure on a business asset that you use for longer. You record it on the balance sheet and depreciate it; so it is not an expense in one go.
Accrual principle (toerekeningsbeginsel): Allocating income and expenses to the year to which they relate, not to the year in which the money comes in or goes out.
Private withdrawal (privéonttrekking): Money you withdraw from the business as an entrepreneur. It is not an expense: it reduces your equity, not your profit. Sole trader →
Capital contribution (storting): Money you put into the business yourself. It increases your equity and is not income.

Equity

Equity is what remains when you deduct all liabilities from the assets.

Equity (eigen vermogen): Assets minus liabilities: the value that belongs to the business. Opening and closing equity →
Opening equity of the financial year (EV begin boekjaar): The equity on the first day of the financial year. In a first financial year that is zero.
Closing equity of the financial year (EV eind boekjaar): The equity at the balance sheet date: the opening balance plus the result, your contributions and the other movements, minus your drawings and the dividend.
Capital (kapitaal): For a sole trader or VOF, the item in which the balance of your capital contribution, drawings and result comes together.
Retained earnings (winstreserve): Profit kept in the business (for a BV).
Share premium (agio): The amount that shareholders pay on top of the nominal value of the shares (for a BV).
Dividend: Profit that the BV distributes to the shareholders. It is not an expense but an appropriation of the result.
Appropriation of the result (resultaatbestemming): What happens with the result of the financial year: adding it to equity, distributing it as dividend, or both.

Tax

The annual accounts are not the same as the tax return. These terms come up often.

Corporation tax (vennootschapsbelasting, VPB): The tax on the profit of a BV or other legal entity. Annual accounts for a BV →
Income tax (inkomstenbelasting): The tax on the profit of a sole trader or VOF, in box 1 of the tax return.
Taxable profit (fiscale winst): The profit according to the tax rules. That can differ from the commercial result in the annual accounts.
Permanent difference: A difference between commercial and taxable profit that never disappears, for example non-deductible expenses. Annual accounts and tax return →
Temporary difference: A difference that reverses later, for example depreciation that runs differently for tax purposes than commercially.
Sound business practice (goed koopmansgebruik): The tax rules for determining profit, with a consistent policy (article 3.25 of the Dutch Income Tax Act 2001, Wet IB 2001). Accounting policies →
VAT (btw): Turnover tax that you charge to customers and pay over. It is neither income nor an expense.
Entrepreneurs' allowance (ondernemersaftrek): Deductions in the income tax return, such as the self-employed person's allowance. They belong in the tax return, not in the annual accounts.

Accounting policies and valuation

The accounting policies are the rules you followed when preparing the figures.

Accounting policies (grondslagen van waardering): The rules you follow when valuing assets and liabilities and when determining the result. Accounting policies explained →
Historical cost (historische kosten): Valuing at what something cost, less depreciation. The usual basis in the Netherlands.
Consistency (bestendigheid): Using the same accounting policies from year to year. If you do change them, that is a change of accounting policy that you must disclose and apply to the comparative figures.
Comparative figures: The figures of the previous financial year next to those of this year, in the same form and according to the same accounting policies.
Notes (toelichting): The part of the annual accounts in which you explain, for each item, how the amount is built up and which choices you made.
Materiality (materieel belang): Whether an item or difference is large enough to influence the reader's assessment. If so, it must be included or explained.

Legal form and filing

What you must prepare and make public depends on your legal form.

Legal entity (rechtspersoon): A BV or NV. For a legal entity, annual accounts law (Title 9 Book 2 of the Dutch Civil Code) applies by force of law.
Title 9 Book 2 of the Dutch Civil Code (Titel 9 Boek 2 BW): The statutory framework for the annual accounts of legal entities: which documents belong in them and how you value items. Annual accounts for a BV →
Filing obligation (deponeringsplicht): The obligation to make the annual accounts public at KVK. It applies to legal entities, not to a sole trader or VOF. Filing with KVK →
Publication document (publicatiestuk): The abridged document you file with KVK: balance sheet, limited notes and the filing details. What you make public →
Micro and small: Size classes that determine how much you must publish. Micro and small legal entities may shorten the accounts considerably.
Management report (bestuursverslag): A report of the management on the financial year. Not mandatory for micro and small legal entities.
Signing (ondertekening): The signing block with place, date and the name of the director, the business owner or all partners.
Financial year (boekjaar): The period you report on, usually a calendar year.
Non-calendar financial year (afwijkend boekjaar): A financial year that does not run from 1 January to 31 December, for example from July to June.
Publication deadlines (publicatietermijnen): 5 months to prepare the annual accounts, 8 days after adoption to file, and at the latest 12 months after the end of the financial year. The deadlines →

Frequently asked questions

What is the difference between turnover and profit?

Turnover is everything you invoiced in a period, excluding VAT. Profit is what remains after all costs, depreciation and taxes are deducted. Turnover says something about the size of your business, profit about what you keep from it.

What is the difference between equity and profit?

Profit is the result over a period; equity is the value that belongs to the business at one moment. Profit increases equity, drawings and dividend reduce it.

What is the difference between costs and an investment?

An investment is an expenditure on something you use for longer than a year; you put it on the balance sheet and depreciate it in instalments. Costs are charged directly to the result of this year.

What is the difference between a provision and a liability?

With a liability you know the amount and usually also when you have to pay, for example a supplier invoice. With a provision the existence of the obligation is certain, but the amount or the timing is not yet — think of a warranty obligation.

What does VAT mean for my annual accounts?

VAT that you charge to customers is not turnover, and VAT you pay is not an expense. You only include the balance that you still have to pay over or get back: as a VAT liability or as VAT receivable.

Preparing annual accounts: step by stepThe whole route from bookkeeping to signing.
Balance sheet and profit and loss accountThe two statements these terms belong to.
Knowledge baseAll articles in one place.

Prepare your annual accounts yourself?

Work through the wizard, check your figures and download the annual accounts and the KVK filing documents as PDFs. € 60,44 per financial year, once.

Start your annual accounts View a sample See how it works first

Je vult eerst alles in en bekijkt het resultaat — betalen doe je pas als je de stukken wilt downloaden. Geen abonnement. En zit er een fout in de stukken die wij kunnen herstellen? Dan leveren we gratis een nieuwe versie, zo vaak als nodig.

These terms are explained in general terms. For your own situation, your bookkeeping and the rules of KVK and the Belastingdienst are decisive. ZelfJaarrekening.nl is a tool, not an accounting firm; you cannot derive rights from this explanation.