key terms

Question 1

current assets

Answer 1

something you own for less than a year

e.g.

Question 2

intangible assets

Answer 2

assets that aren’t physical in nature

e.g. patent

Question 2

fixed assets/ non-current assets

Answer 2

something you own for a long period off time/ over a year

Question 3

tangible assets

Answer 3

assets that are physical in nature

Question 4

financial assets

Answer 4

investments

Question 5

liability

Answer 5

something a business owes/ a debt

Question 6

Assets

Answer 6

something a business owns

Question 7

current liability

Answer 7

must be paid within 1 year

Question 8

buying on credit

Answer 8

buy now pay later

Question 9

Capital

Answer 9

when the owner puts their private money into a business

Question 10

Debtors

Answer 10

people who owe the business money

Question 11

Creditors

Answer 11

people who the business owe money

Question 12

Expenses

Answer 12

a cost for the business

Question 13

drawings

Answer 13

when an owner takes money or resouces from the business for personal use

Question 14

bank overdraft

Answer 14

when a business has an agreement with the bank to spend more than what’s in their account and pay it back with interest

Question 15

dividends

Answer 15

a sum of money paid to shareholders out of profits

Question 15

depreciation

Answer 15

a reduction in the value of an asset with the passage of time, due in particular to wear and tear

Question 16

gross profit

Answer 16

profit before expenses

(sales - cost of sales)

Question 17

income / gains

Answer 17

money the business receives regularly

Question 18

long term liabilites

Answer 18

paid back over a long period of time

e.g. mortgage

Question 19

Paying in slip

Answer 19

A pay-in-slip is a bank deposit slip that is used to deposit money into a bank account. When a person needs to deposit checks or cash into his bank account, he normally fills out a slip that includes the account number, the date, and the deposit details.

Question 20

Cheque counterfoil

Answer 20

part of a cheque, which is torn off and kept as a receipt by the drawer of a cheque to serve a piece of evidence or proof for having made the payment

Question 21

Reconciliation

Answer 21

an accounting procedure that compares two sets of records to check that the figures are correct and in agreement

Question 22

Source documents

Answer 22

Proof that the transaction occured

Question 23

Subsidiary books

Answer 23

Books of prime entry

Question 24

External stakeholders examples

Answer 24

Government, customers, local community, competitors, suppliers

Question 25

Internal stakeholders examples

Answer 25

Employees, owners, managers

Question 26

Drawings T accounts

Answer 26

Opposite of capital - when owner takes money/ resources out of the business

Question 27

Purchase order

Answer 27

An agreement to purchase the product

Question 28

Delivery note

Answer 28

Person who accepts the package signs it

Question 29

Invoice

Answer 29

A demand for payment (sent from the supplier to buyer requesting payment)

Question 30

Credit note

Answer 30

Opposite of invoice - a refund document (reduces amount owed by buyer)

Question 31

Statement of account

Answer 31

A reminder sent to customers to remind them of their invoices

Question 32

Remittance advice

Answer 32

To let a seller know what invoices are being paid/ they’ve paid

Question 33

Sales ledger

Answer 33

Contains accounts of trade receivables (credit customers)

Question 34

Purchase ledger

Answer 34

Contains accounts of trade payables (credit suppliers)

Question 35

Direct debit

Answer 35

Payments usually vary each time

Question 36

Standing order

Answer 36

Regular payments - fixed amounts going out each time

Question 37

Credit transfers (CT)

Answer 37

Money you send out but not on a regular basis

Question 38

Dishonoured cheque

Answer 38

when a payee cannot successfully deposit the payer’s cheque

Question 39

Unpresented cheque

Answer 39

A cheque drawn (and credited) in the cashbook that had not yet been processed by the bank and therefore not shown in the bank statement

Question 40

Outstanding lodgement

Answer 40

Funds (that have been debited) in the cashbook that has not yet been processed by the bank and therefore not yet show on the bank statement