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Accounting > Terminology > Flashcards

Terminology Flashcards

1
Q

What is accounting

A

The process or recording all business transactions. All the financial information is processed and summarised so that businessmen or women can make informed decisions

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2
Q

What is owners equity

A

The value of the owners investment in the business.

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3
Q

What is an assets

A

These are possessions or items that belong to a business. Assets can be classified into current and non-current assets

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4
Q

What are non-current assets

A

These are assets that have a long life span(more than a year) and are used to generate income.

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5
Q

What are some examples of non-current assets

A

Buildings, vehicles, fixed deposits and equipment

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6
Q

What are current assets

A

These are assets that have a short life span(less than a year) and can be converted into cash within a year. Current assets are also known as working capital

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7
Q

What are some examples of current assets (5)

A

Trading stock, debtors, bank, cash float and petty cash

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8
Q

What is trading stock

A

These are good or products bought by a business which are then sold to customers.

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9
Q

What are debtors

A

People who owe the business money

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10
Q

What is cash float

A

Money kept in tills to give change to customers

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11
Q

What is petty cash

A

Small amounts of money kept by the business to buy certain items like toilet paper, small amounts stationary or tea

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12
Q

What is capital

A

The amount of money the owner invests in a business

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13
Q

What is drawings

A

Money withdrawn by the owner from the business for personal use. The owner can also take stock for personal use

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14
Q

What is income

A

The money that is received by the business through its daily operations

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15
Q

What is an expense

A

The money that is paid out daily, weekly or monthly in order to ensure the business runs smoothly

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16
Q

What are examples of incomes

A

Current income, sales, interest income, rent income and commission income

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17
Q

What are examples of expenses

A

Stationary, wages, salaries, cost of sales, rent expense, interest expense, material costs etc

18
Q

What are liabilities

A

They are debts owed by the business. There are current and non-current liabilities

19
Q

What are current liabilities

A

Debts that need to be payed within a year (short term debts)

20
Q

Give examples of current liabilities

A

Bank overdraft and creditors

21
Q

What are non-current liabilities

A

Debts that need to be related after 12 months (long term debts)

22
Q

What are creditors

A

When the business buys on credit, money is owed to suppliers. These suppliers are called creditors. A Business must pay their creditors within 60-90 days

23
Q

What is sales

A

Money received by the business from goods sold

24
Q

What is current income

A

Money received by the business from services rendered

25
Q

What is rent income

A

Money received from the tenant when renting out premises

26
Q

What is commission income

A

Money received by the business for the sale of goods on behalf of suppliers

27
Q

What is interest income

A

Money received by the business from banks or other financial institutions. Interest is earned on favourable bank balances and when investing in fixed deposits

28
Q

What is cost of sales

A

The cost price of goods sold

29
Q

What he rent expense

A

The monthly rent payed by the business

30
Q

What are salaries

A

Cost of labour which is payed monthly

31
Q

What are wages

A

Cost of labour which is payed weekly or daily

32
Q

What are material costs

A

The cost of items needed when rendering a service

33
Q

What is stationary

A

Cost of stationary items used by the business eg. Pens, ink cartridges, printing paper etc

34
Q

What is interest expense

A

The cost of borrowing funds from banks eg. Using an overdraft facility

35
Q

What are source documents

A

Slips of paper where all the transactions that happen in the business are recorded

36
Q

What are journals

A

Where all the information written in source documents is recorded

37
Q

What is crj for

A

For recording money received by the business

38
Q

What is cpj for

A

For recording money paid out by the business

39
Q

What is debtors journal for

A

For when the business sells good on credit

40
Q

What is general ledger

A

Where the information from the journals is totalled and transferred. There are two general ledger sections, balance sheet and nominal account section

41
Q

Which accounts are part of owners equity

A

Incomes, expenses, capital and drawings

Accounting (13 decks)

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