Terminology Flashcards
What is an asset?
Possessions of a business which has value, could be converted into cash
What is a non-current asset?
Intention is not to be converted. These are possessions purchased by the business with the aim of using them for longer than a year.
List the non-current assets
- Land and buildings
- Vehicles
- Equipment
- Fixed deposits
- Notice deposits
What are land and buildings?
non-current asset
property, factory
buildings, office buildings
What are vehicles?
non-current asset
cars, trucks,
motor cycles, tractors,
bakkies, etc
What is equipment?
Non-current asset computers, printers, tools, cash register / till, desks, chairs, shelves, etc.
What are fixed deposits?
non-current asset
Money invested for a given period of time. Earns interest
What are notice deposits?
money invested for a certain
period, which needs a
notice of 30/60/90 days
before it will be paid back
What is a non-current asset also known as?
Fixed assets
What are current assets?
Assets that can be converted into cash in the short term, less than a year.
List the current assets
- Trading stocks
- Debtors control
- Bank
- Cash float
- Petty cash
What is trading stock?
Current assets
Goods purchased for resale
What is debtors control?
Current assets
those who owe money to the business
What is debtors control also known as?
Accounts receivable
What is the bank?
Current assets
money in the current bank account
What is a cash float?
Current assets
cash in the cash register/ till to give change to customers
What is a petty cash?
Current assets
money used to buy low-cost items, usually less than RI0O per item
When is trading stock expected to be sold by?
Within one year
What are non-current liabilities?
Long-term borrowings that will be paid back over a period longer than a year.
What are non-current liabilities also known as?
Long-term liabilities
List the non-current liabilities
- Loan
* Mortgage bond
What is a loan?
Non-current liabilities
money borrowed to finance business operations. Interest is charged.
What is a mortgage bond?
money borrowed to buy a house, office
List the current liabilities?
- Creditors control
* Bank overdraft
What is creditors control?
money owed to other businesses should WE (our
business) need to buy something on credit
What is creditors control also known as?
Accounts payable
What is a bank overdraft?
a facility offered by the bank where you can use more money than you have in your account
What does owner’s equity consist of?
- Capital
- Drawings
- Income
- Expenses
Define capital
OE
The money or assets the
owner gives to start up a business
Define drawings
OE
The money the owner takes out of the business for personal use
What does the Nominal Accounts Section consist of?
Part of OE
- Income
- Expenses
Define income
OE
Earnings of the business. Income increases OE
Define expense
OE
Costs of running a business. Expenses decrease OE
List examples of income
Sales Current income Commission income (every product you sell) Rent income Interest income
List examples of expenses
Cost of sales Salaries/Wages Telephone Rent expense Water/electricity advertising stationery packing materials insurance cleaning materials repairs/maintenance fuel rates/taxes
