Accounting terms Flashcards
To learn the technical terms used in accounting
Assets
resources owned by business to generate income
Liabilities
obligations or debts owed by the business to third parties like credit suppliers.
Equity
owner’s claim on the business assets or resources.
Current assets
Short term resources owned by the business to generate income. They are used up within a year. e.g. inventory and cash
Non-current assets
Long term resources owned by business to generate income. They benefit the business many years. e.g. motor vehicles
Current liabilities
Obligations or debts which business must repay or settle within the next twelve months. e.g. bank overdraft
Non-current liabilities
Obligations or debts which business needs to pay back only after the next twelve months. e.g. 5-year loan.
Capital
Contributions made by the owner to the business.
Drawings
Business resources taken out by the owner for his personal or private use.
Sales revenue
Earnings from selling of inventory or goods.
Sales returns
Goods returned by customers to the business.
Cost of sales
Cost price of the goods sold to customers.
Gross profit
Gains made from selling of inventory. It is the difference between selling price and cost price.
Trade receivables
Debts owed by customers who buy inventory from business on credit.
Trade payables
Debts owed by business to credit suppliers of inventory.
