Accounting Key Terms Flashcards
Balance Sheet
The financial statement that presents a snapshot of a business’s financial position(assets, capital and liabilities) as of a particular date and time.
Assets
All the items a business owns in order run successfully. These can be cash, stock, debtors, buildings, land, tools,tools, equipment and furniture.
Liabilities
All the debt the business owes, such as mortgages, loans and unpaid bills.
Capital
All the money the business owners invest in the business.
Profit and a loss statement
The financial statement that presents a summary of business’s financial activity over certain period of time such as a month, a quarter or a year.
Income
All sales made in the process of selling business’s goods and services.
Cost of Goods sold.
All costs incurred to operate the business that aren’t directly related to the sale of individual goods or services.
Accounting Period
The time for which financial is being prepared.
Accounting year-end.
In most cases a business accounting year is 12 months.
Trade debtors ( a.k.a Accounts Receivable).
The account used to track all customer sales made on credit.
Trade Creditors ( aka Accounts Payable)
The account used to track all outstanding bills from suppliers, contractors, consultants and any other businesses or individuals from whom the business buys goods or services.
Depreciation
An accounting method used to account for ageing and use of assets.
Nominal Ledger ( or General) Ledger.
A ledger that summarises all the business’s accounts. This is the master summary of the bookkeeping system.
Stock ( or Inventory)
The account that tracks all products sold to customers.
Journals
Where bookkeepers keep records ( in chronological order) of daily business transactions. Each of the most active accounts, including Cash, Trade Creditors and Trade Debtors, has its own journal.
