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Accounting - ICAEW > Accounting Terminology Glossary > Flashcards

Accounting Terminology Glossary Flashcards

1
Q

Accelerated depreciation

A

A decline in the useful value of an asset which is more rapid in the beginning than at the end

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2
Q

Accounting

A

Often called the language of business and is used to record analyse and summarise financial ongoings within a business

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3
Q

Accounting equation

A

Assets = liabilities + owners equity

Accounting is based on the logic of this equation

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4
Q

Accounts payable

A

Money that you owe to regular business creditors

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5
Q

Accounts receivable

A

Money that is owed to you from your customers

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6
Q

Accrual

A

In accrual accounting, net profit is measured by the difference between revenues and expenses, not increases or decreases in cash

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7
Q

ACRS

A

Accelerated cost recovery system

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8
Q

Amortisation

A

The process of gradually paying off a liability over a period of time

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9
Q

Assets

A

Something of value that provides future economic benefit

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10
Q

Balance sheet

A

Shows the assets, liabilities and owners equity at a single point in time

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11
Q

Beginning inventory

A

The inventory that you have on hand at the beginning of an accounting period

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12
Q

Capitalization

A

Costs that increase fixed assets and will not be consumed within one year

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13
Q

Cash

A

Money in the till or in the bank

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14
Q

Cash flow

A

The actual movement of cash within a business

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15
Q

Cost of goods sold (cogs)

A

Beginning inventory plus purchases plus labour minus inventory at the end of the accounting period

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16
Q

Current assets

A

Cash or other assets that can be converted into cash within one year

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17
Q

Current liabilities

A

Debt obligations that must be settled within one year

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18
Q

Depreciation

A

Reduction in the cost basis of the fixed assets due to wear and tear, obsolescence and passage of time

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19
Q

Earnings year to date

A

Profit made this year but not yet distributed

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20
Q

Ending inventory

A

Inventory on hand at the end of the accounting period

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21
Q

Equities

A

Claims against assets

Claims of lenders/creditors = liabilities

Claims of owner = owners equity

22
Q

Expenditures

A

Same as capitalization

23
Q

Expenses

A

Costs of doing business

24
Q

FIFO

A

First in first out

25
Q

Fixed assets

A

Property, plant and equipment owned by a business entity

Normally not intended for sale and are used continuously

26
Q

Fixed costs

A

Operating costs that remain consistent regardless of sales

27
Q

Gross profit

A

Sales minus cost of goods sold

28
Q

Income statement

A

Summarises the revenue and expenses of a company over a period of time

29
Q

Intangible assets

A

Patents, good will, logos, trademarks & franchises

30
Q

Inventory

A

This is accounted for as raw materials, goods in process and finished products

31
Q

Investment tax credit

A

An incentive offered by the government to encourage capital expenditures

32
Q

Lease

A

A rental contract

33
Q

Liabilities

A

Debts and accounts that are payable

34
Q

LIFO

A

Last in first out

35
Q

Liquidity

A

Ease with which assets can be converted into cash

36
Q

Long term liabilities

A

Debt obligations that don’t need to be settled within one year

37
Q

Net profit

A

Same as net income, gross profit minus expenses

38
Q

On account

A

If you’re buying on credit, it’s an account payable

If you sell on credit, it’s an account receivable

39
Q

Original investment

A

Your own money that was used to start the company

40
Q

Owners equity

A

This is the part of the assets that the owner has claims to after all liabilities are paid

41
Q

P&L statement

A

Profit & loss statement AKA Income statement

42
Q

Prepaid expenses

A

Payments made in advance for which the company has not yet received the benefits

43
Q

Profit

A

What is left after paying all expenses including taxes

44
Q

Retained earnings

A

The total cumulative net profit that a business owns over its life, and has not yet been distributed

45
Q

Straight line depreciation

A

A method of allocating the net cost of a fixed asset in equal amounts over a set period of time

46
Q

Tax liabilities

A

Money owed to the government for taxes

47
Q

Variable costs

A

Expenses which are directly related to the volume of sales

E.g. manufacturing labor, raw materials, cost of sales (cogs)

48
Q

Estimated liabilities (example)

A

Warranties

49
Q

Known liabilities (example)

A

Loans, bonds

50
Q

Bond

A

A company borrowing money

A company getting a note payable

Accounting - ICAEW (7 decks)

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