THEORY Flashcards
1
Q
DEFINE ACCOUNT
A
-CONSTISTS OF A DEBIT SIDE AND CREDIT SIDE AND IT IS A PLACE IN THE RECORDS WHERE THE MONETARY VALUE OF TRANSACTIONS IS POSTED TO
2
Q
ACCOUNTING EQUATION
A
-OWNER’S EQUITY PLUS LIABILITIES EQUALS ASSETS
3
Q
ACCOUNTING / FINANCIAL PERIOD
A
-A FIXED PERIOD FOR WHICH THE FINAL CCOUNTS ARE DRAWN UP TO CALCULATE A PROFIT / LOSS - SHOULD ALWAYS BE THE SAME LENGTH FOR COMPARISON PURPOSES
4
Q
DEFINE ACCOUNTING
A
-THE RECORDING OF FINANCIAL TRANSACTIONS OFAN INDIVIDUAL OR A BUSINESS ENTERPRISE IN MONETARY TERMS
5
Q
DEFINE ASSETS
A
-BELONGINGS / POSSESSIONS OF THE BUSINESS
6
Q
BAD DEBTS RECOVERED
A
MONEY RECEIVED FROM DEBTORS AFTER WE HAVE ALREADY WRITTEN OFF THEIR ACCOUNTS
7
Q
WHAT IS THAT PART OF THE BUSINESS’ DEBTS THAT CANNOT BE RECOVERED - A LOSS TO THE BUSINESS?
A
- BAD DEBTS
8
Q
DEFINE BALANCE SHEETS ACCOUNTS SECTION
A
- THE SECTION OF THE GENERAL LEDGER THAT INCLUDE ALL ASSETS, LIABILITIES AND OWNER’S EQUITY ACCOUNTS
9
Q
DEFINE BALANCE SHEET
A
A STATEMENT THAT SHOWS THE FINANCIAL POSITION OF A BUSINESS ON A SPECIFIC DATE
10
Q
DEFINE BALANCING
A
- THE ACTION WHEREBY THE DIFFERENCE BETWEEN THE CREDIT AND DEBIT SIDE OF AN ACCOUNT IS CALCULATED
11
Q
DEFINE CASH
A
ALL THE MONEY (NOTES AND COINS) THAT THE BUSINESS HAS ON TIS PREMISES, PETTY CASH AND CASH FLOAT EXCLUDED
12
Q
DEFINE BANK TRANSFERS
A
ELECTRONIC FUNDS TRANSFERS ARE A WAY TO SEND MONEY FROM ONE BANK ACCOUNT DIRECTLY INTO ANOTHER
13
Q
DEFINE BOOK OF FIRST ENTRY
A
DATA FROM SOURCE DOCUMENTS IS ENTERED DAILY IN JOURNALS AND BOOKS TO RECORD TRANSACTIONS
14
Q
DEFINE CAPITAL
A
MONEY AND/OR ASSETS THE OWNER CCONTRIBUTES TO THE BUSINESS
15
Q
DEFINE CARRIAGE ON PURCHASES / CARRIAGE INWARDS
A
THE EXPENSE OF PAYING FOR THE TRANSPORT OF GOODS THAT HAVE BEEN BOUGHT FOR RESALE
16
Q
DEFINE CARRIAGE OUTWARDS
A
THE EXPENSE TO PAY FOR THE TRANSPORT OF GOODS TO THE CUSTOMERS
17
Q
DEFINE CASH BOOK
A
BOOK OF FIRST ENTRY USED TO RECORD ALL CASH AND BANK TRANSACTIONS
18
Q
DEFINE CASH FLOAT
A
THE MONEY IN THE CASH REGISTER WHICH THE CASHIER STARTS EVERY DAY TO BE ABLE TO GIVE CHANGE TO THE CUSTOMERS
19
Q
DEFINE CASH SALES
A
WHEN THE BUSINESS RECEIVES MONEY BY CASH OR DEBIT CARD FOR THE SALE OF GOODS IMMEDIATELY
19
Q
DEFINE CASH PURCHASES
A
WHEN A BUSINESS BUYS GOODS FOR RESALE AND PAYS IMMEDIATELY, BY CASH / DEBIT CARD / BANK TRANSFERS
20
Q
DEFINE CASH REGISTER ROLL
A
SOURCE DOCUMENT FOR CASH SALES (INCLUDING DEBIT CARD SALES)
21
Q
DEFINE CLOSING STOCK / FINAL STOCK
A
THE VALUE OF THE GOODS THAT HAVE NOT BEEN SOLD AND ARE ON HAND AT THE END OF A FINANCIAL PERIOD
22
Q
DEFINE CLOSING TRANSFER
A
JOURNAL ENTRY TO CLOSE OFF ALL NOMINAL ACCOUNTS AND STOCK TO FINAL ACCOUNTS AND DRAWINGS TO THE CAPITAL ACCOUNT
23
Q
DEFINE COST OF SALES
A
THE COST OF GOODS SOLD (OPENING STOCK + (PURCHASES - PURCHASES RETURNS) + CARRIAGE INWARDS - CLOSING STOCK)
24
DEFINE COST PRICE
PRICE FOR WHICH YOU BUY A PRODUCT OR GOOD
25
DEFINE CREDIT CARD
A CARD THAT IS USED TO PAY IMMEDIATELY AND THEN THE CARD HOLDER REFUNDS THE BANK; A CARD THAT PROVIDES A SHORT TERM CREDIT AT THE POINT OF SALE
26
DEFINE CREDIT CARD SALES
WHEN THE CUSTOMER PAYS FOR GOODS WITH A CREDIT CARD
27
DEFINE CREDIT PURCHASES
WHEN A BUSINESS BUYS GOODS FOR RESALE, RECEIVES THEM AND PAYS AT A LATER STAGE
28
DEFINE CREDIT NOTE
A DOCUMENT GIVEN TO THE BUYER FROM THE SELLER FOR THE RETURN OF GOODS; A SOURCE DOCUMENT FOR RETURN JOURNALS
29
DEFINE CREDIT SALES
WHEN THE BUSINESS RECEIVES MONEY FOR A SALE OF GOODS AT A LATER STAGE
30
DEFINE CREDIT SIDE
RIGHT HAND SIDE OF A T-ACCOUNT IN THE GENERAL LEDGER
31
DEFINE CREDITOR
A PERSON/BUSINESS TO WHOM THE BUSINESS OWE MONEY
32
CREDITORS JOURNAL
BOOK OF FIRST ENTRY USED TO RECORD ALL CREDIT PURCHASES TRANSACTIONS
33
DEFINE CREDITOR LEDGER
LEDGER USED FOR INDIVIDUAL CREDITORS' ACCOUNTS
34
DEFINE CREDITORS LIST
LIST OF NAMES AND BALANCES OF INDIVIDUAL CREDITORS' ACCOUNTS ON A SPECIFIC DATE
35
DEFINE CURRENT ASSETS
ASSETS WHICH HAVE A SHORT LIFE AND CAN BE CONVERTED TO CASH EASILY
36
DEFINE CURRENT INCOME
MONEY RECEIVED FOR THE RENDERING OF SERVICES
37
DEFINE PAYE
TAX DEDUCTED FROM EMPLOYEE WAGE/SALARY AND PAYABLE TO THE RECEIVER OF REVENUE
38
define current liabilities
LIABILITIES THAT SHOULD BE PAID BACK OVER A PERIOD SHORTER THAN A YEAR
39
DEFINE DEBIT CARD
A BANK CARD THAT IS USED TO WITHDRAW CASH OR TRANSFER MONEY FROM YOUR CURRENT ACCOUNT TO THE ACCOUNT PF THE PERSON/ BUSINESS WHOM YOU PAY
40
DEFINE DEBIT NOTE
DOCUMENT SENT FORM BUYER TO SELLER WITH RETURNED GOODS
41
DEFINE DEBIT SIDE
THE LEFT-HAND SIDE OF T-ACCOUNT IN THE GENERAL LEDGER
42
DEFINE DEBTOR
A CUSTOMER WHO OWES MONEY TO THE BUSINESS
43
DEFINE DEBTORS JOURNAL
BOOK OF FIRST ENTRY USED TO RECORD ALL CREDIT SALES OF GOODS
44
DEFINE DEBTORS LEDGER
LEDGER USED FOR INDIVIDUAL DEBTORS' ACCOUNTS
45
DEFINE DEBTORS LIST
LIST OF NAMES AND BALANCES OF INDIVIDUAL DEBTORS' ACCOUNTS
46
DEFINE DEPOSIT SLIP
A SOURCE DOCUMENT USED TO DEPOSIT MONEY INTO THE BUSINESS' CURRENT BANK ACCOUNT
47
DEFINE DISCOUNT RECEIVED
AN AMOUNT DEDUCTED FROM THE AMOUNT DUE TO A CREDITOR IF THE BUSINESS PAYS WITHIN THE TIME LIMIT
48
DEFINE DISCOUNT ALLOWED
AN AMOUNT THAT THE DEBTOR DOESN'T HAVE TO PAY IF HE PAYS BACK HIS ACCOUNT ON TIME
49
DEFINE DONATIONS
WHEN THE BUSINESS GIVES GOODS OR MONEY FOR CHARITY WITHOUT RECEIVING PAYMENT FOR IT
50
DEFINE DOUBLE ENTRY PRINCIPLE
FOR EVERY DEBIT THERE MUST BE A CREDIT OF THE SAME VALUE
51
DEFINE DRAWINGS
ANY ASSETS, GOODS OT MONEY THE OWNER TOOK FOR PERSONAL USE FROM THE BUSINESS
52
DEFINE EQUIPMENT
PART OF THE FIXED ASSETS
53
DEFINE EXPENSES
MONEY SPENT ON THE DAY-TO-DAY RUNNING COSTS OF THE BUSINESS
54
DEFINE FINANCIAL STATEMENTS
INCOME STATEMENT AND BALANCE SHEET THAT GIVE THE AN OVERVIEW OF THE RESULT FOR A FINANCIAL PERIOD AND FINANCIAL POSITION AT THE END OF THE FINANCIAL PERIOD RESPECTIVELY
55
DEFINE FINAL ACCOUNTS
TRADING ACCOUNT AND PROFIT AND LOSS ACCOUNT THAT ARE DRAWN UP AT THE END OF A FINANCIAL PERIOD
56
DEFINE FIXED ASSETS
POSSESSIONS OR PROPERTY WITH A LONG LIFE TO BE USED IN THE BUSINESS
57
DEFINE FOLIO NUMBERS
REFERS TO THE REFERENCE NUMBER OF THE JOURNALS/BOOKS OF FIRST ENTRY FROM WHICH TRANSACTION DATA ARE POSTED TO THE LEDGER ACCOUNTS AND THE REFERENCE NUMBERS OF THE LEDGER ACCOUNTS TO WHICH POSTING WAS DONE FROM THE BOOKS OF FIRST ENTRY
58
DEFINE GENERAL JOURNAL
ONE OF THE BOOKS OF FIRST ENTRY USED TO RECORD TRANSACTIONS THAT DO NOT FIT IN ANY OF OTHER BOOKS OF FIRST ENTRY
59
DEFINE GENERAL LEDGER
LEDGER THAT INCLUDES OWNER'S EQUITY, LIABILITIES, ASSETS, INCOME, EXPENSES AND FINAL ACCOUNTS
60
DEFINE GROSS INCOME
GROSS PROFIT PLUS OTHER INCOME FOR A FINANCIAL PERIOD
61
DEFINE GROSS PROFIT
DIFFERENCE BETWEEN SALES AND COST OF SALES
62
DEFINE GROSS WAGES
NORMAL TIME PLUS OVERTIME WAGES
63
DEFINE IMPREST SYSTEM
THE OPENING AMOUNT FOR PETTY CASH, IT IS THE SAME FOR EACH MONTH
64
DEFINE INCOME STATEMENT
A STATEMENT THAT SHOWS THE FINANCIAL RESULT OF A SPECIFIC FINANCIAL PERIOD
65
DEFINE INCOME
MONEY WHICH THE BUSINESS RECEIVES DURING ITS DAY-TO-DAY OPERATIONS
66
DEFINE INITIAL/OPENING STOCK
THE CLOSING STOCK BROUGHT FORWARD FROM THE PREVIOUS YEAR AND IS THE STOCK ON HAND AT THE BEGINNING OF THE ACCOUNTING PERIOD
67
DEFINE INTEREST ON FIXED DEPOSIT
WHEN THE BANK PAYS US INTEREST FOR MONEY THAT WE INVESTED WITH THEM FOR A CERTAIN PERIOD
68
DEFINE INTEREST ON LOAN
INTEREST PAID TO THE BANK WHEN YOU BORRROW MONEY FROM THEM
69
DEFINE INTEREST ON OVERDRAFT
THE INTEREST YOU HAVE TO PAY TO THE BANK FOR USING ITS MONEY IF YOU USE THE FACILITY AT THE BANK TO SPEND/USE MORE MONEY THAN YOU HAVE IN YOUR CURRENT ACCOUNT
70
DEFINE INTEREST PAID
INTEREST THAT YOU HAVE TO PAY TO YOUR CREDITORS IF YOU DO NOT THE OUTSTANDING AMOUNT YOU OWE THEM IN TIME
71
DEFINE INTEREST ON CURRENT ACCOUNT
INTEREST THAT IS RECEIVED FROM THE BANK IF A CURRENT ACCOUNT HAS A POSITIVE BALANCE
72
DEFINE INTEREST RECEIVED
INTEREST CHARGED TO DEBTOR'S ACCOUNTS IF THEY DO NOT PAY THEIR ACCOUNT ON TIME
73
DEFINE INVESTMENT
MONEY SAVE AT A FINANCIAL INSTITUTION FOR A CERTAIN PERIOD OF TIME
-FIXED DEPOSIT
74
DEFINE INVOICE
A DETAILED DOCUMENT RECEIVED WHEN BUYING GOODS
75
DEFINE LIABILITIES
MONEY OWED BY THE BUSINESS TO OUTSIDE PERSONS OR BUSINESSES
76
DEFINE LONG-TERM LIABILITIES
LIABILITIES THAT CAN BE PAID BACK OVER A PERIOD LONGER THAN ONE YEAR
77
DEFINE NARRATION
AN EXPLANATORY NOTE TO INDICATE THE NATURE OF THE GENERAL JOURNAL ENTRY RECORDED
78
DEFINE NET LOSS
GROSS INCOME LESS EXPENSES AND THE EXPENSES OF THE BUSINESS EXCEEDS ITS INCOME
79
DEFINE NET PROFIT
GROSS INCOME LESS EXPENSES AND THE INCOME EXCEEDS THE OPERATING EXPENSES OF THE BUSINESS
80
DEFINE NET WAGES
GROSS WAGES MINUS DEDUCTIONS
81
DEFINE NOMINAL ACCOUNTS SECTION
THE SECTION OF THE GENERAL LEDGER THAT CONSISTS OF INCOME AND EXPENSE ACCOUNTS
82
DEFINE NORMAL TIME
THE NUMBER OF HOURS A WORKER SHOULD WORK OVER A GIVEN PERIOD OF TIME
83
DEFINE OTHER INCOME
ALL INCOME RECEIVED EXCEPT SALES
84
DEFINE OVERDRAFT
WHEN THE BUSINESS WITHDRAWS MORE MONEY THAN IS AVAILABLE IN THE CURRENT ACCOUNT WITH PERMISSION FROM THE BANK
85
DEFINE OVERTIME
EXTRA TIME (MORE THAN NORMAL TIME) WORKED IN A GIVEN TIME
86
DEFINE OWNER'S EQUITY
ACCOUNTS THAT SHOW THE INTEREST OF THE OWNER IN THE BUSINESS - CAPITAL AND DRAWINGS
87
DEFINE PERIODIC STOCK SYSTEM
PHYSICAL STOCK VALUATION THAT TAKES PLACE AT THE END OF A SPECIFIC FINANCIAL PERIOD
88
DEFINE PERPETUAL STOCK SYSTEM
CONTINUOUS RECORDS KEPT OF THE MOVEMENT OF GOODS IN AND OUT OF THE BUSINESS
89
DEFINE PETTY CASH BOOK
BOOK OF FIRST ENTRY WHERE ALL CASH PAYMENTS AND PETTY CASH RECEIPTS ARE RECORDED
90
DEFINE PETTY CASH VOUCHER
AN INTERTNAL SOURCE DOCUMENT FROM WHICH ENTRIES ARE MADE IN THE PETTY CASH BOOK
91
DEFINE PETTY CASH
AN AMOUNT OF CASH KEPT IN A BUSINESS TO DO SMALL PAYMENTS
92
DEFINE POSTING
COMPLETION OF DOUBLE ENTRY FROM THE JOURNALS TO THE LEDGERS
93
DEFINE POST-CLOSING TRIAL BALANCE
LIST OF BALANCES OF OWNER'S EQUITY, ASSETS AND LIABILITY ACCOUNTS AFTER NOMINAL ACCOUNTS HAVE BEEN CLOSED OFF FOR THE YEAR
94
DEFINE PROFIT AND LOSS ACOUNT
FINAL ACCOUTNS DRAWN UP TO CALCULATE A NET PROFIT OR LOSS
95
DEFINE PROOF OF PAYMENT
A DOCUMENT RECEIVED FOR DEBIT CARD OR ELECTRONIC FUNDS TRANSFER TRANSACTIONS
96
DEFINE PURCHASES RETURNS/ RETURNS OUTWARDS
WHEN THE BUSINESS RETURNS GOODS TO THE SUPPLIER
97
DEFINE PURCHASES
THE VALUE OF GOODS BOUGHT BY THE BUSINESS WITH THE INTENTION OF SELLING THEM AT HIGHER PRICE
98
DEFINE RECEIPT
A SOURCE DOCUMENT ISSUED FOR MONEY RECEIVED
99
DEFINE RECORDING
THIS IS TO WRITE/DRAW UP/ RECORD THE INFORMATION IN A USABLE FORM IN DIFFERENT JOURNALS/BOOKS OF FIRST ENTRY AND LEDGERS
100
DEFINE RENT INCOME
THE MONEY WE RECEIVE WHEN RENTING A PART OF THE BUSINESS' BULDINGS
101
DEFINE WAGES JOURNAL
BOOK OF FIRST ENTRY USED TO RECORD EMPLOYEES' WAGES
102
DEFINE WAGES
THE REMUNERATION WORKERS RECEIVE WHEN THEY ARE PAID WEEKLY- THESE ARE NORMALLY PAID IN CASH OR BY BANK TRANSFER
103
DEFINE TURNOVER
SALES LESS SALES RETURNS
104
DEFINE TRIAL BALANCE
LIST OF ACCOUNTS WITH THEIR DEBIT AND CREDIT BALANCES EXTRACTED ACCOUNTS IN THE LEDGERS TO CHECK THE CORRECTNESS OF THE DOUBLE ENTRY PRINCIPLE
105
DEFINE TRANSACTION
THE ACTIONS, BUYING AND SELLING OF GOODS OR RENDERING OF SERVICES, WHICH HAPPEN IN A BUSINESS AT A CERTAIN TIME, OF WHICH THE MONEY VALUE IS RECORDED IN THE BOOKS OF THE BUSINESS
106
DEFINE TRADING
BUYING AND SELLING OF PRODUCTS
107
DEFINE SALARY
THE REMUNERATION WORKERS RECEIVE WHEN THEY ARE PAID MONTHLY
108
DEFINE SALES RETURNS/RETURNS INWARDS
WHEN THE CUSTOMER RETURNS GOODS TO THE BUSINESS
109
DEFINE SALES
THE VALUE OF GOODS THE BUSINESS SELL TO CUSTOMERS
110
DEFINE SOURCE DOCUMENT
A DOCUMENT FROM WHICH TRANSACTIONS ARE RECORDED IN THE BOOKS OF FIRST ENTRY - A PROOF OF TRANSACTION
111
DEFINE STOCK TAKING
THE PHYSICAL STOCK COUNTING OF THE STOCK ITEMS WHICH IS NORMALLY DONE AT THE END OF THE FINANCIAL PERIOD
112
DEFINE TRADE DISCOUNT
A REDUCTION RECEIVED FROM A SUPPLIER WHEN PURCHASING LARGE QUANTITIES OF GOODS
113
DEFINE TRADING ACCOUNT
FINAL ACCOUNT DRAWN UP TO CALCULATE GROSS PROFIT
114
DEFINE STOCK
THE GOODS ON HAND AND AVAILABLE FOR SALE TO CUSTOMERS AT ANY GIVEN TIME
115
DEFINE STOP ORDER
AN INSTRUCTION GIVEN TO THE BANK TO MAKE SPECIFIED PAYMENTS AT GIVEN DATES FROM THE CURRENT BANK ACCOUNT
116
DEFINE T-ACCOUNT
A GENERAL LEDGER ACCOUNT IS SHOWN IN A T-FORM, LEFT DEBIT AND RIGHT CREDIT
117
DEFINE EMPLOYMENT OF CAPITAL
A SECTION OF THE BALANCE SHEET SHOWING HOW THE FUNDS OF THE BUSINESS WERE USED
118
DEFINE ELECTRONIC FUND TRANSFER
IS THE ELCTRONIC TRANSFER OF MONEY FROM ONE BANK ACCOUNT TO ANOTHER
119
DEFINE BANK STATEMENT
A DOCUMENT FROM THE BANK OUTLINING ALL THE TRANSACTIONS THAT TOOK PLACE IN THE CURRENT ACCOUNT OF THE ACCOUNT HOLDER
120
DEFINE BUSINESS ENTITY
AN ACCOUNTING PRINCIPLE THAT STATES THAT THE PRIVATE TRANSACTIONS OF THE OWNER AND THE TRANSACTIONS OF THE BUSINESS SHOULD BE KEPT SEPARATE - THEY ARE TWO SEPARATE ENTITIES
121
DEFINE CAPITAL EMPLOYED
A SECTION OF THE BALANCE SHEET SHOWING THE SOURCES OF FUND IN THE BUSINESS
122
DEFINE SERVICE BUSINESS
A BUSINESS THAT RENDERS A SERVICE AS A MEANS OF INCOME
123
DEFINE SUNDRY ACCOUNTS
REPRESENT THE SMALL CASH PAYMENTS ON SPECIFIC ACCOUNTS NOT REFLECTED IN THE ANALYSES COLUMNS
124
DEFINE SUNDRY EXPENSES
REPRESENTS EXPENDITURE ON SMALL ITEMS THAT COULD NOT BE CLASSIFIED WITH THE EXISTING EXPENDITURE ACCOUNTS
125
DEFINE TRADING BUSINESS
A BUSINESS THAT BUYS GOODS AND SELLS THEM TO CUSTOMERS AT A HIGHER PRICE
126
DEFINE WORKING CAPITAL
CURRENT ASSETS LESS CURRENT LIABILITIES
