FA Flashcards
What is an asset?
A present economic resource controlled by the entity as a result of past events
What are liabilities?
A present obligation of the entity to transfer an economic resource as a result of past events
What is equity?
The residual interest in the assets of the entity after deducting all its liabilities (net assets)
What is income?
Increases in assets/decreases in liabilities that results in increases in equity
What is an expense?
Decreases in assets, or increases in liabilities that result in decreases in equity
What does a debtor represent?
The right to receive money from a customer as a result of a past sale or credit
What does a creditor represent?
An obligation to pay money to a supplier as a result of past purchases on credit
The reporting entity
An entity that prepares financial statements
Accrual accounting
Represents the effects of transactions in the periods in which those effects occur, even if the resulting cash receipts and payments occur in a different period
Matching
Income earned and the related expenses should be matched against each other within the periods in which those effects occur
Aged debtors ledger
A record of the amounts each individual owes you
Aged creditors ledger
A record of the amounts that the entity owes to each supplier
Balance sheet
A FS giving details of entity’s financial position at a particular point in time, made up of assets, liabilities and capital
Chart of accounts
A listing of all accounts used in the nominal ledger of an entity
Financial Statements (FS)
Collection of reports prepared by an entity including the balance sheet and P&L account
Journal entry
Debits and credits of a transaction entry into the accounting system
Ledger
A paper or electronic book/file for recording the financial transactions
Nominal ledger
The ledger where all the accounting transactions are held. It will include details of all assets, liabilities, capital, income and expenses
Profit & Loss (P&L account)
A financial statement showing an entity’s net profit or loss in a given period, including details of income and expenses
Sales invoice
A document that you send to your customer detailing the transaction
Supplier invoice
A document you receive from a supplier when you receive goods or service from them
Trial balance
Period end summary of the balances within each nominal ledger account
Input VAT
The VAT paid by the entity when purchasing goods
Output VAT
VAT received by the entity when selling goods
