C1 - Purpose Of Accounting Flashcards
Definition of financial transactions
Actions that involve money going into or out of a business
Definition of profit
Difference between money from sales and the costs of the business
Definition of losses
When more is spent than received by the business
Definition of costs
Spending too much on assets or expenses
Definition of efficiency
At collecting money owed from customers
Definition of assets
What you own
Money owing from customers
Trade receivables - will be controlled and chased
Money owing to suppliers
Trade payables - will be watched to avoid mounting up
Definition of trade receivables
Customers who buy on credit from the business (buy now pay later - in 30 days)
Definition of trade payables
Suppliers who give credit to the business (raw materials or stock not requiring immediate payment)
Definition of fraud
Illegally taking company money for personal gain
Definition of sales revenue
The income a business generates from the sale of goods or services
Definition of expenses
The costs of operating a business
Definition of tax
A compulsory contribution to state revenue. Money paid to the government based on a % profit
Definition of cost of goods sold
Cost of raw materials and making the products
