terms Flashcards
Double entry concept
In every transaction, there is a debit and a corresponding credit entry.debit the reviver and credit the giver
Accrual basis
All income earned, expenses incurred and recorded in the period in which the occurred and not when cash is revived or paid
Credit losses
Credit clients that have defaulted. Also known to as bad debts
Accrued
Owing or outstanding
Prepaid
Amount paid/revived in advance
Consumable stores
Items such as packing materials, stationery and any other consumable consumed within the financial period
Prepaid
Amount paid or received in advance
Dividends
A share of profits revived by shareholders
Statement of profit and loss
Provide a summary of an organisations revenue and expenses
Statement of financial position
Evaluates the financial position of a company by focusing on its assets,liabilities and shareholders equity
Relevant costs
Costs appropriate to aiding the decision-making process
Variable cost
Costs that fluctuate in line with volume
Fixed costs
Costs that remain constant even when volume changes
Sunk costs
Costs already incurred therefore irrelevant to the decision at hand
Direct material
Primary and raw material to be converted into a finished product through manufacturing process
