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Accounting
| Question | Answer |
|---|---|
| Accounting | The processing and communication of financial information to enable economic decisions to be made |
| Accounting Equation | Assets less (-) liabilities = Equity |
| Accounts Payable | Amounts owed by the business for items bought on credit |
| Accounts Recievable | Amounts owed to the business for items sold on credit |
| Asset | A future economic benefit presently controlled by an entity as a result of a past transaction |
| Current Assets | Those that are expected to be turned into cash in the coming year. E.g. Cash, Accounts recievable |
| Non- Current Assets | Those that are expected to be turned into cash in more than one year. E.g. Building, Vechiles |
| Balance Sheet | Statement used to calculate the equity/net worth of a business |
| Company | 1 or more owners; limited liability; continuos existence |
| Partnership | 2-25 owners usually, unlimited liability; non-continuos existence E.g. Law firm |
| Sole Trader | 1 owner; unlimited liability; non-continuos existence E.g. Butcher |
| Continuos Existence | The ownership of the business can be transferred to another person |
| Non Continuos Existence | The ownership of the business cannot be transferred to another person |
| Credit Purchase | Buy a good or service now and pay later |
| Expenses | Payment made for ongoing costs in the operation of the business |
| Group One Expenses | Those relating to the provision of the good or service itself. E.g. Plumbers wages for a plumbing business; Advertising |
| Administration Expenses | Those relating to the daily running of the business. E.g. Rent; Telephone |
| Financial Expenses | Those relating to the funds of the business. E.g. Interest on loan |
| Income | What a persons earns. E.g. Wages; Salary; Interest |
| Income Statement | Statement used to calculate the net profit of a business |
| Share | A unit of ownership in a company |
| Diviend | A return on a share |
| Liability | A future economic sacrifice an entity is presently obliged to make, as a result of a past transaction |
| Current Liability | Those items owing that are expected to be repaid in the coming year. E.g. Bank overdraft; Accounts Payable |
| Limited Liability | If the business fails, the owner's personal assets may not be used to repay the debts of the business |
| Unlimited Liability | If the business fails, the owner's personal assets may be used to repay the debts of the business |
| Revenue | The earnings of a firm. They increase owner's equity. E.g. Sales; Fees charged |
| Other Revenue | Earnings of the business not relating to the core work of the business. E.g. Interest/Dividends Earned |
| Net Loss | Expenses are greater than revenue |
| Net Profit | Revenue less (-) Expenses= Net Profit |
| Net Worth | A person's assets less (-) their liabilities |
| (Owner's) Equity | The amount that the business owes the owner. The net worth of the business |
| Drawings | The assets or value of assets of a business taken by the owner for their own personal use. E.g. Cash from the till |
Created by:
Alice Brockie
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