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28/9/17 AS Accounting - Key Terms > Key Terms > Flashcards

Key Terms Flashcards

1
Q

What is inventory?

A

Raw materials or items for resale.

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2
Q

What is duality?

A

When two things happen. (e.g. paying and receiving)

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3
Q

What are the three different types of business?

A

Sole Trader
Partnership
Limited Liability Company

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4
Q

What is a sole trader?

A

This means that only one person owns the company. There is no difference between personal assets and business assets.

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5
Q

What is an asset?

A

What you own.

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6
Q

What is liability?

A

What you owe.

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7
Q

What is a partnership?

A

When two or more people own the business.

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8
Q

What is a limited liability company?

A

It is owned by shareholders whose liability is limited to the amount invested in shares.

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9
Q

What does the right side of a ledger show?

A

Amounts credited to the account.

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10
Q

What does the left side of a ledger show?

A

Amounts debited to the account.

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11
Q

What is petty cash?

A

Loose notes and coins.

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12
Q

What does cash at bank mean?

A

Money in your bank account. (the digital number)

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13
Q

What does Dr mean?

A

Debit

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14
Q

What does Cr mean?

A

Credit

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15
Q

What is a ledger?

A

A big book split into pages or ‘accounts’.

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16
Q

What is an income statement?

A

Profit loss. A statement that shows our performance in businesses sales, expenses and profits.

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17
Q

What is a statement of financial position?

A

A record of our assets and liabilities.

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18
Q

What type of discount does not need to be recorded in a ledger?

A

Trade

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19
Q

What is trade receivable?

A

Amounts owed by customers.

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20
Q

What is trade payable?

A

Amounts owed to customers.

21
Q

How do we record a trade discount?

A

Record the amount after the discount has been taken off. Do not record the original amount unless necessary.

22
Q

What is the cash discount/early settlement payment?

A

Discount for early payment.

23
Q

What is a non-current asset?

A

An asset bought on credit for the long term in a business.

24
Q

What is Capital?

A

The money or supplies used to start a business.

25
Q

What is gross profit?

A

Sale minus the cost of sales.

26
Q

What is a net asset?

A

The net value of the company.

27
Q

What are books of prime entry used for?

A

Listing all transactions of a similar nature before we post them into a double entry book keeping system (a ledger). They are just a list, not an actual part of the double entry book keeping system.

28
Q

What are the six different books of prime entry?

A 
Sales Day Book 
Sales Returns Day Book 
Purchases Day Book 
Purchase Returns Day Book
Cash Book 
Journals
29
Q

What is a sales Day Book?

A

This is a book of prime entry. It records sales and is produced from the invoices we send to customers.

30
Q

What is a sales return day book?

A

This is a book of prime entry. It records sales returns and is produced from the credit noted that we send to customers.

31
Q

What is a purchase day book?

A

It is a book of prime entry. It records our purchases and is produced from the invoices we receive from suppliers.

32
Q

What is a purchase returns book?

A

It is a book of prime entry. It records our purchase returns and is produced from the credit notes we receive from suppliers.

33
Q

What is a purchase order?

A

A document we send to our supplier requesting goods.

34
Q

What is a credit note?

A

It is received when goods are returned to a supplier or we send when goods are returned.

35
Q

What is an invoice?

A

It is sent with goods that are sold.

36
Q

What is a trial balance?

A

A list of all the balances extracted from the ledgers at a certain date. We can check that the credits and debits balance.

37
Q

What is an error of omission?

A

Miss out an entry completely.

38
Q

What is an error of commission?

A

An entry posted to the wrong account but the same class or type of account e.g. gas instead of electricity.

39
Q

What is error of principle?

A

An entry posted to the wrong account and to a different type or class e.g. revenue expenditure vs. capital expenditure.

40
Q

What is an error of original entry?

A

When an entry is entered into a book of prime entry incorrectly.

41
Q

What is a complete reversal of entry?

A

Debits and credits the wrong way round.

42
Q

What is a compensating error?

A

Errors that cancel each other out.

43
Q

What is a subsidiary book?

A

A book of prime entry.

44
Q

What is carriage inwards?

A

Cost of delivery of purchases.

45
Q

What is carriage outwards?

A

A normal expense e.g. cost of delivery

46
Q

What are return inwards?

A

Sales returns.

47
Q

What are return outwards?

A

Purchase returns.

48
Q

What is inventory?

A

Stock

28/9/17 AS Accounting - Key Terms (1 decks)

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