Definitions Flashcards
Retained Profit
The accumulation of profits and losses over the years, less any dividends. (Undistributed profits)
An asset
A resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise
1) control
2) past events
3) economic benefits
A liability
A present obligation of the enterprise arising from past events, the settlement of which is expected to follow in an out flow from the enterprise of resources embodying economic benefits
1) present obligation
2) past event
3) economic benefits
Equity
The residual value in the assets of an entity after deducting all its liabilities
Income
Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from owners.
Expenses
Decreases in economic benefits during the accounting period in the forms of outflows or depletion’s of assets or increases of liabilities that result in decreases of equity, other than those a relating to distribution to owners.
Cash
Cash in hand and demanded deposits
Cash equivalents
Short term, highly liquid investments which are readily convertible into known amounts of cash
Fair value
The amount for which an asset could be exchanged between knowledgeable willing parties in an arms length transaction.
Depreciation
Systematic allocation of the depreciable amount of an asset over its useful life
Intangible assets
A resource controlled by an entity as a result of past events from which future economic benefits are expected to flow for more than one accounting period.
Amortisation
‘Depreciation’ for an asset with a finate lift.
Carrying amount
Amount at which an asset is recognised after the deduction of depreciation or amortisation
Impairment loss
When The carrying amount exceeds its recoverable amount
Fair value
Price that would be received to sell an asset or paid to transfer a liability in a transaction in the martlet at a measurable date
Recoverable amount
Value of an asset calculated as the higher of the value in use and its fair value less costs to sell.
Value in use
Present value of future cash flows through the use of the asset
Lease
A contract that conveys the right to use an asset for a period of time in exchange for consideration
Right of use asset
An asset that represents a lessees right to use an underlying asset for a period of time
Short term lease
A lease with a term of 12 month or less
Lessee
The entity that obtains the right to use an asset
Lessor
The entity that provides the asset in the exchange for receiving consideration
Contingent liability
Obligation is only possible or cannot be measured reliably.
Contingent asset
An asset arising from past events who’s existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within control of the entity.
Revenue
Income arising in the course of an entity’s ordinary activities
Parent company
The acquirer, an entity that controls another
Subsidiary company
Acquiree, and entity that’s is controlled by another
Acquisition date
Date at which control is gained by
Acquisition method
Measures the cost of assets and liabilities being acquired and usually results in the recognition of goodwill
Business combinations
Formation of a group though acquisition
Fair value
The price that would be received/paid to sell or transfer an asset or liability in an ordinary transaction
Goodwill
The excess of the cost of the acquisition over fair value of assets and liabilities
Property, plant and equipment
Any tangible asset that is held for use, and is expected to be used for more than one accounting period.
Inventory
Assets held for sale or use in the ordinary course of business
Provision
A liability of uncertain timing or amount.
