|Accounting ||The processing and communication of financial information to enable economic decisions to be made|
|Accounting Equation ||Assets less (-) liabilities = Equity|
|Accounts Payable ||Amounts owed by the business for items bought on credit|
|Accounts Recievable ||Amounts owed to the business for items sold on credit|
|Asset ||A future economic benefit presently controlled by an entity as a result of a past transaction|
|Current Assets ||Those that are expected to be turned into cash in the coming year. E.g. Cash, Accounts recievable|
|Non- Current Assets ||Those that are expected to be turned into cash in more than one year.
E.g. Building, Vechiles|
|Balance Sheet ||Statement used to calculate the equity/net worth of a business|
|Company ||1 or more owners; limited liability; continuos existence|
|Partnership ||2-25 owners usually, unlimited liability; non-continuos existence
E.g. Law firm|
|Sole Trader ||1 owner; unlimited liability; non-continuos existence
|Continuos Existence ||The ownership of the business can be transferred to another person|
|Non Continuos Existence ||The ownership of the business cannot be transferred to another person|
|Credit Purchase ||Buy a good or service now and pay later|
|Expenses ||Payment made for ongoing costs in the operation of the business|
|Group One Expenses ||Those relating to the provision of the good or service itself.
E.g. Plumbers wages for a plumbing business; Advertising|
|Administration Expenses ||Those relating to the daily running of the business.
E.g. Rent; Telephone|
|Financial Expenses ||Those relating to the funds of the business.
E.g. Interest on loan|
|Income ||What a persons earns.
E.g. Wages; Salary; Interest|
|Income Statement ||Statement used to calculate the net profit of a business|
|Share ||A unit of ownership in a company|
|Diviend ||A return on a share|
|Liability ||A future economic sacrifice an entity is presently obliged to make, as a result of a past transaction|
|Current Liability ||Those items owing that are expected to be repaid in the coming year.
E.g. Bank overdraft; Accounts Payable|
|Limited Liability ||If the business fails, the owner's personal assets may not be used to repay the debts of the business|
|Unlimited Liability ||If the business fails, the owner's personal assets may be used to repay the debts of the business|
|Revenue ||The earnings of a firm. They increase owner's equity.
E.g. Sales; Fees charged|
|Other Revenue ||Earnings of the business not relating to the core work of the business.
E.g. Interest/Dividends Earned|
|Net Loss ||Expenses are greater than revenue|
|Net Profit ||Revenue less (-) Expenses= Net Profit|
|Net Worth ||A person's assets less (-) their liabilities|
|(Owner's) Equity ||The amount that the business owes the owner. The net worth of the business|
|Drawings ||The assets or value of assets of a business taken by the owner for their own personal use.
E.g. Cash from the till|