3.4 Final Accounts Flashcards
Cost of Goods Sold
The direct cost of producing or purchasing the goods that were sold during that period
Dividends
A sum of money paid to shareholders decided by the board of directors of a company
Asset
Resources of value that a business owns or that are owed to it
Fixed assets
An asset that is expected to last for more than a year in the business
Current assets
Short term assets that last in a business for up to 12 months, including cash, debtors, and stock
Liabilities
A firm’s legal debts or what it owes to other firms, institutions, or individuals
Current liabilities
Short term debts that are payable by a business up to 12 month including creditors, overdrafts, and tax
Long term liabilities
Long term debts payable after 12 months by the business, including long term bank loans, mortgages
Working capital
Also known as net current assets, helps establish whether a firm can pay its day-to-day running costs
Net Assets
The value of a company’s assets minus its liabilities, which much balance with its equity
Equity
Shows how the net assets are financed using shareholders’ capital and retained profit
Debtors
Customers who have bought products on credit and will pay cash at an agreed date in the future (type of current asset)
Creditors
Suppliers who sold goods on credit to the firm who are owed money (type of current liability
Intangible Assets
Fixed assets that lack physical substance
Patents
Provide inventors with the exclusive rights to manufacturer, use, sell or control their invention of a product
Goodwill
The value of positive attributes that relate to a business
Copyright laws
Laws that provide creators with the exclusive right to protect the production and sale of their work
Trademarks
A recognizable symbol, word, phrase or design that is officially registered and that identifies a product or business
Depreciation
The decrease in the value of a fixed asset over time
Wear and tear
The repeated use of fixed assets causes them to fall in value
Obsolescence
Existing fixed assets fall in value when new/ improved versions are introduced to the market
Residual value (scrap value)
An estimation of an asset’s value over its useful life
Historic cost
Refers to the purchase cost of a fixed asset
Net book value
An asset’s net value at the beginning of an accounting period
