Accounting Terms & Definition Flashcards
Assets
Resources owned by business to generate revenue e.g. cash in hand
Current Assets
Short term resources owned by business to generate revenue e.g. inventory
Liabilities
Obligations or debts owed by a business e.g. trade payables
Current Liabilities
Obligations which need to be repaid within the next accounting year / 12 months
Non-Current Liabilities
Obligations which need to be repaid only after the next accounting year e.g. 5 year loan
Non-Current Assets
Long term resources owned by a business to generate revenue. e.g. furniture
Equity
Owner’s claim on the business assets
Capital
Contributions made by owner to the business
Drawings
Withdrawal of business resources for owner’s personal use.
Gross Profit
Earnings from the sale of inventory, after accounting for the cost of the inventory sold.
Sales revenue
Income earned from the selling of goods
Cost of Sales
Cost price of the inventory sold to customers
Credit sales
Goods sold to customers who pay only in the future.
Credit transactions
Events where payment for the item is made only in the future.
Cash transactions
Events where payment is made immediately for the event.
Sole proprietorship
A form of business where there is only one owner.
Working capital
Short term resources available for daily operation after short term debts are settled.
Depreciation
Allocation of the cost of a non-current asset over its useful life
Accumulated depreciation
Sum of depreciation on non-current asset over the years
Trade receivables
Debts owed by customers due to credit sale of goods
Trade payables
Debts owed to credit suppliers of goods.
Bank statement
A document from the bank showing the deposits and withdrawals of funds from the bank account.
Invoice
A document showing credit supply of items or services
Credit note
A document informing a reduction in debt owed
Debit note
A document informing an increase in debt owed
Receipt
A document informing money is received.
Expense
Operating cost or overheads
