common terms Flashcards
(21 cards)
Accounting period
The span of time covered by a set of financial statements
Accruals
An accumulated debt
Assets
Things the business owns
Current assets
the short term assets used in day to day running - they have a life of less than one year for example, stock. They will be used within one year to generate revenue.
Fixed assets
the long term assets with a useful life of more than a year for example, property or equipment
Balance sheet
a snapshot of all the assets, liabilities and money in a business.
Capital
cash or liquid assets
Owners Capital
The owners money
Cash flow
the movement of money in and out of the business
Cash flow forecast
A prediction of cash flow over a future period
Cash flow statement
A record of actual money transfer activities
Direct costs
variable costs
Indirect costs
fixed costs
Fixed costs
never change no matter how many units are produced e.g. rent/van lease
Variable costs
Change with the number of units produced e.g. raw materials/packaging
Depreciation
the fall in value of an asset over time
Income statement
a financial document that shows the income and expenditure to see of the business is making a profit or loss
Liabilities
the debts you owe other parties
Current liabilities
Creditors that must be paid within one year e.g. suppliers of raw materials
Long term liabilities
creditors that are paid after more than one year
Liquidity
a company’s ability to raise finance when it needs it
