accounting terminologies (h-r)

Description

Accounting terms
Vijaya Raikode
Flashcards by Vijaya Raikode, updated more than 1 year ago
Vijaya Raikode
Created by Vijaya Raikode over 1 year ago
0
0

Resource summary

Question Answer
Last In, First Out (LIFO) Computation of the cost of items sold or consumed during a period on the basis that the items last acquired were sold or consumed first.
Liability The financial obligation of an enterprise other than owners’ funds.
Lien Right of one person to satisfy a claim against another by holding or retaining possession of that other’s assets/property.
Long-term Liability Liability which does not fall due for payment in a relatively short period, i.e., normally a period not more than twelve months.
Lease A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time.
Materiality An accounting concept according to which all relatively important and relevant items, i.e., items the knowledge of which might influence the decisions of the user of the financial statements are disclosed in the financial statements.
Mortgage transfer of interest in specific immovable property for the purpose of securing a loan advanced, or to be advanced, an existing or future debt or performance of an engagement which may give rise to a pecuniary liability. security is redeemed when the loan is repaid or the debt discharged or the obligations performed.
Net Assets/ Shareholders’ funds/ Net Worth The excess of the book value of assets (other than fictitious assets) of an enterprise over its liabilities. This is also referred to as net worth or shareholders’ funds.
Net Fixed Assets Fixed assets less accumulated depreciation thereon up-to-date.
Net Profit/Net loss The excess of revenue over expenses during a particular accounting period. When the result of this computation is negative, it is referred to as net loss. The net profit may be shown before or after tax.
Net realizable value Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Obsolescence Diminution in the value of an asset by reason of its becoming out-of date or less useful due to technological changes, improvement in production methods, change in market demand for the product or service output of the asset, or legal or other restrictions.
Operating Profit The net profit arising from the normal operations and activities of an enterprise without taking account of extraneous transactions and expenses of a purely financial nature.
Paid-up Share Capital That part of the subscribed share capital for which consideration in cash or otherwise has been received. This includes bonus shares allotted by the corporate enterprise.
Preference Share Capital Preference Share Capital That part of the share capital of a corporate enterprise which enjoys preferential rights in respect of payments of fixed dividend and repayment of capital. Preference shares may also have full or partial participating rights in surplus profits or surplus capital.
Preliminary Expenses Expenses relating to the formation of an enterprise. These include legal, accounting and share issue expenses incurred for formation of the enterprise.
Prepaid Expense Payment for expense in an accounting period, the benefit for which will accrue in the subsequent accounting period(s).
Prime Cost The total cost of direct materials, direct wages and other direct production expenses.
Prior Period Item Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods.
Profit/Loss A general term for the excess of revenue over related cost. When the result of this computation is negative it is referred to as loss.
Profit and Loss Account A financial statement which presents the revenues and expenses of an enterprise for an accounting period and shows the excess of revenues over expenses (or vice versa). It is also known as profit and loss account.
Promissory Note An instrument in writing (not being a bank note or currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.
Provision An amount written off or retained by way of providing for depreciation or diminution in value of assets or retained by way of providing for any known liability the amount of which cannot be determined with substantial accuracy.
Provision for Doubtful Debts A provision made for debts considered doubtful of recovery.
Prudence (sentence 1) A concept of care and caution used in accounting according to which (in view of uncertainty attached to future events) profits are not anticipated, but recognised only when realised, though not necessarily in cash.
Prudence (sentence 2) Under this concept, provision is made for all known liabilities and losses, even though amount cannot be determined with certainty and represents only a best estimate in the light of available information.
Redeemable Preference Share The preference share that is repayable either after a fixed or determinable period or at any time decided by the management (by giving due notice), under certain conditions prescribed by the instrument of incorporation or the terms of issue.
Redemption Repayment as per given terms normally used in connection with preference shares and debentures.
Reserve The portion of earnings, receipts or other surplus of an enterprise (whether capital or revenue) appropriated by management for a general or a specific purpose other than a provision for depreciation or diminution in the value of assets or for a known liability. The reserves are primarily of two types: capital reserves and revenue reserves.
Revaluation Reserve A reserve created on the revaluation of assets or net assets of an enterprise represented by the surplus of the estimated replacement cost or estimated market values over the book values thereof.
Residual value Residual value is the amount which an enterprise expects to obtain for an asset at the end of its useful life after deducting the expected costs of disposal.
Revenue/Income Revenue is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by othersof enterprise resources yielding interest, royalties and dividends. Revenue is measured by the charges made to customers or clients for goods supplied and services rendered to them and by the charges and rewards arising from the use of resources by them. In an agency relationship, the revenue is the amount of commission and not the gross inflow of cash, receivables or other consideration.
Revenue Reserve Any reserve other than a capital reserve.
Right Share An allotment of shares on the issue of fresh capital by a corporate enterprise to which a shareholder is entitled on payment, by virtue of his holding certain shares in the enterprise in proportion to the number of shares already held by him. (Shares allotted to certain categories of debenture holders pursuant to the rights enjoyed by them are sometimes called right shares)
Show full summary Hide full summary

Similar

CPA Exam Topics and breakdown
joemontin
CPA Exam Flashcards
joemontin
CPA Exam Sample Questions Pt. 1
nedtuohy
Accounting Definitions
Tess Morris
Accounting I - Objective 2 Keller
Kathleen Keller
Exam Bank 2
Valek
Specific Order Costing
Natalie Gray
COSTING SYSTMES
Francia o
Glossary of Accounting Terms
racheloucks
Unit 4 The Accounting Cycle
a.j.hemphill
Chapter One: Introduction to Accounting
charlotte.power9