Accounting terminology

Question 1

Land and Buildings, definition, heading eg. current assets

Answer 1

• Property owned by the business. fixed asset

Question 2

Vehicles, heading eg. current assets

Answer 2

Vehicles - Delivery vans, motorcycles, company cars. fixed asset

Question 3

Equipment, definition, heading eg. current assets

Answer 3

• Computers, fax machines, printers, furniture, machinery, etc. fixed asset

Question 4

investments, definition, heading eg. current assets

Answer 4

savings by the business, for future use. financial assets

Question 5

trading stock, definition, heading eg. current assets

Answer 5

• Goods that have been bought to be resold at a profit.

(stock) current asset

Question 6

debtors, definition, heading eg. current assets

Answer 6

• People who owe the business money. current asset

Question 7

bank, definition, heading eg. current assets

Answer 7

• The money in the business current bank account. current asset

Question 8

cash float, definition, heading eg. current assets

Answer 8

• Money in the cash register used for change for the

customers. current asset

Question 9

petty cash, definition, heading eg. current assets

Answer 9

• Money in a little cash box which is used to pay cash for

little items like stamps and stationery. current assets

Question 10

capital, definition, heading eg. current assets

Answer 10

• This is money that the owner contributes to start the
  business, he can also contribute a vehicle or other fixed
  assets. owners equity

Question 11

drawing, definition, heading eg. current assets

Answer 11

• This is when the owner takes anything home from the
  business for his own personal use or, uses the firm’s
  money to pay for his own private accounts. owners equity

Question 12

net profit, definition, heading eg. current assets

Answer 12

• This is added to the Owner’s Equity at the end of the
  business year. This is the reward the owner receives for
  his hard work and for investing his capital in the
  business. owners equity

Question 13

mortgage bond, definition, heading eg. current assets

Answer 13

• A loan taken out when you buy a building and this can

be paid back over a number of years. long term liabilities

Question 14

bank loan, definition, heading eg. current assets

Answer 14

• A loan taken out to pay for something else needed in the business – eg. Vehicles, equipment, etc. long term liabilities

Question 15

creditors definition, heading eg. current assets

Answer 15

• People the business owes money to, ie. the factories

that the business buys stock from on credit. current liabilities.

Question 16

bank overdraft, definition, heading eg. current assets

Answer 16

• When the business draws out more money from their
  bank account than they had available. They are,
  therefore, taking a short term loan from the bank. current liabilities.

Question 17

cost of sales, definition, heading eg. current assets

Answer 17

• The cost price of the trading stock the firm has sold. expenses

Question 18

fuel, definition, heading eg. current assets

Answer 18

• Petrol and oil that the business uses for their company

cars. expenses

Question 19

postage, definition, heading eg. current assets

Answer 19

• Money spent on stamps for posting letters and parcels for the business. expenses

Question 20

salaries, definition, heading eg. current assets

Answer 20

• This is paid to permanent staff once a month. expenses

Question 21

wages, definition, heading eg. current assets

Answer 21

• This is normally paid to temporary or casual staff once a a week, by cash cheque. expenses

Question 22

trading licence, definition, heading eg. current assets

Answer 22

• A licence which must be purchased before the business

can buy and sell stock.. expenses

Question 23

donations, definition, heading eg. current assets

Answer 23

• Money given to a charity as a donation, eg. To the SPCA. expenses

Question 24

bad debts, definition, heading eg. current assets

Answer 24

• Debtors who have gone bankrupt/died/fled the country
  and the business with never receive this money, so we
  write it off as an expense. expenses

Question 25

advertising, definition, heading eg. current assets

Answer 25

• Money spent by the business on advertising. expenses

Question 26

stationary, definition, heading eg. current assets

Answer 26

• Pens, pencils invoice books, printing paper, staples, etc. all used by the business in their office.. expenses

Question 27

consumable goods, definition, heading eg. current assets

Answer 27

• Goods that are used up while the business is rendering a service, eg shampoo at a hairdresser. expenses

Question 28

packing material, definition, heading eg. current assets

Answer 28

• Packaging used for the customers to take their purchases home in, as well as any boxes or packets the business
  might use. expenses

Question 29

water, definition, heading eg. current assets

Answer 29

• Water used by the business. expenses

Question 30

electricity, definition, heading eg. current assets

Answer 30

• Electricity used by the business. expenses

Question 31

telephone, definition, heading eg. current assets

Answer 31

• The telephone bill which is charged on calls made by the business. expenses

Question 32

rent expense, definition, heading eg. current assets

Answer 32

• When the business does not own property and rents the premises from another person. expenses

Question 33

repairs, definition, heading eg. current assets

Answer 33

• Repair work done to the assets of the business. expenses

Question 34

insurance, definition, heading eg. current assets

Answer 34

• A policy taken out by the business in case of accidental

loss or damage to their business assets. expenses

Question 35

rates, definition, heading eg. current assets

Answer 35

• Money paid to the municipality if the business owns

property. expenses

Question 36

taxes, definition, heading eg. current assets

Answer 36

• Money paid to the Receiver of Revenue from the profit the business has made. expenses

Question 37

deprectiation, definition, heading eg. current assets

Answer 37

• The expense taken off the business assets as their value decreases. expenses

Question 38

bank charges, definition, heading eg. current assets

Answer 38

• charges made by the bank for administration of your

account. expenses

Question 39

sales, definition, heading eg. current assets

Answer 39

• The selling price of the trading stock sold. income

Question 40

current income definition, heading eg. current assets

Answer 40

• Money received for rendering a service, eg A hairdresser for cutting hair. income

Question 41

Rent income, definition, heading eg. current assets

Answer 41

• Money received for renting out a part of the building the

business owns. income

Question 42

Commission

Received, definition, heading eg. current assets

Answer 42

• This is extra money received for selling something on

behalf of another person. income

Question 43

Interest on

current account, definition, heading eg. current assets

Answer 43

• Interest earned from the bank for money kept in the firm’s current account. income