Accounting Flashcards
(19 cards)
Accounts payable
Amounts owed by the business for the items bought on credit
Accounts receviable
Amounts owed to the business for the items sold on credit
Assets
Resources that are presently owned and controlled by a business or a person.
Liabilities
The amount that are presently owed by a business or a person which must be repaid in the future.
Current Asset
Assets that are expected to be owned, used for less than a year or expected to be converted into cash within the next 12 months.
Non-current asset
Assets that are expected to be owned, used for longer than a year or not expected to be converted into cash within the next 12 months
Current liability
Liabilities that are expected to be repaid within the next 12 months
Non-current liability
Liabilities that are NOT expected to be repaid within the next 12 months
Expenses
Outflows of assets incurred by a business whilst it generates revenue
Group 1 expenses
Expenses directly related to the promotion, distribution and provision of its goods/ services
e.g. Advertising, shop rent, shop wages
Adminstration expenses
Expenses related to the daily running of the business
e.g. Rates, office rent, electricity
Finance cost
Expenses related to the interest payments
e.g. Interest on loan, interest on mortgage
Revenue
Income earned from the normal business operations
e.g. selling goods or providing services to the consumers
Other income
Additional income earned from activities unrelated to the normal business operations
e.g. Rent received, dividends received, interest received
Income
Inflows of assets from the business activities or the investments
Income statement
Financial Statement used to calculate the total income and the total expense of a business, which then will be used to calculate the business Profit/Loss for the year
Profit of the year
The positive amount remaining after subtracting the total expenses incurred from the total income earned over a year
Loss of the year
The negative amount remaining after subtracting the total expenses incurred from the total income earned over a year
Profitablility
Profitability isa measurement of a business’s income relative to its expenses
