Key Terms Flashcards
Trade Receivables
Customers that owe the business money (debtors)
Sales Day Book
Lists and analyses the credit sales invoices raised to our trade receivables
Sales Returns Day Book
Lists and analyses the credit notes raised to our Trade Receivables
Discount Allowed Day Book
Lists the credit notes raised to our Trade Receivables when they make a payment and take prompt payment discount
Trade payables
Suppliers that we have bought goods or services from on credit (creditors)
Purchase Day Book
Lists and analyses the credit purchase invoices from suppliers of the business
Purchase Returns Day Book
Lists and analyses the credit notes issued to us from our suppliers of the business
Discount Received Day Book
Lists the credit notes issued to us from our Trade Payables after we have made a payment and taken payment discount
Cash Book
Lists and can analyse the payments and receipts into and out of the bank a/c of the business
Petty Cash Book
Lists and analyses all payments and receipts into and out of the Petty Cash A/C
General Ledger
The main ledger where all the transactions of a business are recorded and from which the trial balance is extracted
Sales Ledger/Receivables ledger
The subsidiary ledger that contains all the individual Trade Receivable/Customer Accounts
Purchase Ledger/Payables Ledger
The subsidiary ledger that contains all the individual Trade Payable/Supplier Account
Coding
System of creating unique references for documents or accounts; can be numeric, alpha or alpha-numeric
Dual Effect
‘For every DR, there must be a CR’
Statement of Financial Position
Shows the assets and liabilities of the business at a given point in time
Assets
Items owned by the business that are used within the business
Liabilities
Items owed by the business
Expenses
The everyday costs of running the business - they are always Debits (DR)
Income
The everyday income of the business - normally sales - they are always credits (CRs)
Accounting Equation
Assets - Liabilities = Capital
Capital/Equity
The amount invested by the owner/partner of the business. It includes any profit/loss generated by the business less any Drawings taken by the owner.
Capital Income
One off income streams e.g. bank loan, selling an asset
Capital Expenditure
Expenditure on capital items - non-current assets
Revenue Income
Everyday income of the business
Revenue Expenditure
Everyday expenses of the business
Statement of Profit or Loss
This statement details the sales and costs of the business for a period and would show the resulting profit or loss
