Basic Accounting Course Notes- Terminology

Question 1

Balance Sheet

Answer 1

Statement of financial position

Question 2

Profit and loss account

Answer 2

Statement of profit or loss and other comprehensive income

Question 3

Profit and loss reserve (in statement of financial position)

Answer 3

Retained earnings

Question 4

Turnover

Answer 4

Revenue

Question 5

Debtor account

Answer 5

Account retrievable

Question 6

Debtors (eg ‘debtors have increased’)

Answer 6

Receivables

Question 7

Debtor

Answer 7

Customer

Question 8

Creditor account

Answer 8

Account payable

Question 9

Creditors (eg ‘creditors have increased’)

Answer 9

Payables

Question 10

Creditor

Answer 10

Supplier

Question 11

Stock

Answer 11

Inventory

Question 12

Fixed asset

Answer 12

Non-current asset (generally). Tangible fixed assets are also referred to as ‘property, plant and equipment’

Question 13

Long-term liability

Answer 13

Non-current liability

Question 14

Provision (eg for depreciation)

Answer 14

Allowance (you will sometimes see ‘provision’ used too.)

Question 15

General ledger

Answer 15

Nominal ledger

Question 16

VAT

Answer 16

Sales tax

Question 17

Debentures

Answer 17

Loan notes

Question 18

Preference shares/dividends

Answer 18

Preference shares/dividends

Question 19

Amortisation is calculated and accounted for in the same way as ____

Answer 19

Depreciation

Question 20

Goodwill arising in acquisition

Answer 20

The excess of the purchase consideration for a business over the fair value of the individual assets and liabilities acquired

Question 21

Writing off

Answer 21

The debit balance being classified as an expense and transferring payments on the statement of profit or loss

Question 22

Trade discount vs early settlement discount

Answer 22

Percentage deducted from the list price of goods

Reduction in the amount payable in return for payment within an agreed period

Question 23

A business charges VAT on its sales (_____ tax) and suffers VAT on its purchases (____ tax)

Answer 23

Output, input