key terms Flashcards
current assets
something you own for less than a year
e.g.
intangible assets
assets that aren’t physical in nature
e.g. patent
fixed assets/ non-current assets
something you own for a long period off time/ over a year
tangible assets
assets that are physical in nature
financial assets
investments
liability
something a business owes/ a debt
Assets
something a business owns
current liability
must be paid within 1 year
buying on credit
buy now pay later
Capital
when the owner puts their private money into a business
Debtors
people who owe the business money
Creditors
people who the business owe money
Expenses
a cost for the business
drawings
when an owner takes money or resouces from the business for personal use
bank overdraft
when a business has an agreement with the bank to spend more than what’s in their account and pay it back with interest
dividends
a sum of money paid to shareholders out of profits
depreciation
a reduction in the value of an asset with the passage of time, due in particular to wear and tear
gross profit
profit before expenses
(sales - cost of sales)
income / gains
money the business receives regularly
long term liabilites
paid back over a long period of time
e.g. mortgage
Paying in slip
A pay-in-slip is a bank deposit slip that is used to deposit money into a bank account. When a person needs to deposit checks or cash into his bank account, he normally fills out a slip that includes the account number, the date, and the deposit details.
Cheque counterfoil
part of a cheque, which is torn off and kept as a receipt by the drawer of a cheque to serve a piece of evidence or proof for having made the payment
Reconciliation
an accounting procedure that compares two sets of records to check that the figures are correct and in agreement
Source documents
Proof that the transaction occured
Subsidiary books
Books of prime entry
External stakeholders examples
Government, customers, local community, competitors, suppliers
Internal stakeholders examples
Employees, owners, managers
Drawings T accounts
Opposite of capital - when owner takes money/ resources out of the business
Purchase order
An agreement to purchase the product
Delivery note
Person who accepts the package signs it
Invoice
A demand for payment (sent from the supplier to buyer requesting payment)
Credit note
Opposite of invoice - a refund document (reduces amount owed by buyer)
Statement of account
A reminder sent to customers to remind them of their invoices
Remittance advice
To let a seller know what invoices are being paid/ they’ve paid
Sales ledger
Contains accounts of trade receivables (credit customers)
Purchase ledger
Contains accounts of trade payables (credit suppliers)
Direct debit
Payments usually vary each time
Standing order
Regular payments - fixed amounts going out each time
Credit transfers (CT)
Money you send out but not on a regular basis
Dishonoured cheque
when a payee cannot successfully deposit the payer’s cheque
Unpresented cheque
A cheque drawn (and credited) in the cashbook that had not yet been processed by the bank and therefore not shown in the bank statement
Outstanding lodgement
Funds (that have been debited) in the cashbook that has not yet been processed by the bank and therefore not yet show on the bank statement
