Key Points Primer 2 Flashcards
(24 cards)
current assets
assets expected to be converted into cash in that year
debtors
customers that owe money (accounts receivable)
marketable securities
short term investments, securities or debts to be sold or redeemed within a year
creditors
money owed (accounts payable)
overdraft
short term bank borrowings
accurals
expense recongized before its paid
debentures
loans in small amounts, not secured by physical assets or collateral by creditworthiness and reputation of issuer
called up share capital
‘face vale’ shareholders money they put in on a permanent basis
contra account
natural balance is opposite of the associated account, ex accumulate depreciation
what happens to retained earnings reserve when dividends are paid?
retained earnings reserve in the balance sheet is reduced
retained earnings formula
RE = Beg. RE + Net Income - Dividends
historic cost
price of an asset based on original cost when acquired
net relaizable value
the amount a company should expect to recieve once it sells or disposes of an asset
replacement cost
the cost you’d have to pay to replace an asset with a similar asset at the present time and value
gross profit
sales revenues - COGS (general indicuation of profitabllity, not as prcises as net profit)
net profit
ALL revenues - ALL expenses
operating profit
gross profit - operating expenses
sales revenue
income realised from selling goods or services before deductions for expenses
Cost of sales
direct costs incurred by businesses from the process of selling goods and services
profit for financinal year
profit after deducting interest and tax
credit sales
before cash has been received
receipt
any amount of cash received from sales, services, investing activites, etc.
- transfer of cash
time period
income statment = period of time
balance sheet = point in time
other names for income statement
statement of operations or profit and loss
