Extra terms Flashcards
internal control
is the procedures, policies, processes and systems in place in order to protect a businesses assets and financial records
classifications of businesses
merchandising: creates profit by purchasing stock and reselling at a higher price
service: creates profit by providing a service to customers
manufacturing: creates profit through the purchase of raw materials and converting them into products.
types of business ownership
sole trader: is an individual who owns a business without a legal entity
partnerships: is considered with 2 or more owners and is unincorporated
company: incorporated body created by law and is a legal entity
monetary assumptions
Monetary assumption: any entries in the accounting system must be expressed in units of currency]
Public company
Listed on ASX
Private company
Small # of shareholders, not listed on ASX
business entity
Business entity: when business transactions are separate from personal transitions
going concerned
Going concerned: in order to continue to operate the business, all debts are paid when they are due.
historical cost
Historical cost: the value of an asset or product is always recorded at the original cost of the first purchase.
accounting period
accounting period: trading performance of the business is reported on a consistent time period
double entry
Double-entry: always two entries, one debit and one credit so that the accounting system is balanced