accounting terminologies (c&d)

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accounting terminologies
Vijaya Raikode
Flashcards by Vijaya Raikode, updated more than 1 year ago
Vijaya Raikode
Created by Vijaya Raikode over 1 year ago
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Called-up Share Capital That part of the subscribed share capital which shareholders have been required to pay.
Capital Generally refers to the amount invested in an enterprise by its owners e.g. paid-up share capital in a corporate enterprise. It is also used to refer to the interest of owners in the assets of an enterprise.
Capital Assets Assets, including investments not held for sale, conversion or consumption in the ordinary course of business.
Capital Commitment Future liability for capital expenditure in respect of which contracts have been made.
Capital Employed The finances deployed by an enterprise in its net fixed assets, investments and working capital. Capital employed in an operation may, however, exclude investments made outside that operation.
Capital Profit/Capital Loss Excess of the proceeds realised from the sale, transfer, or exchange of the whole or a part of a capital asset over its cost. When the result of this computation is negative, it is referred to as capital loss.
Capital Reserve A reserve of a corporate enterprise which is not available for distribution as dividend.
Capital Work-in-progress Expenditure on capital assets which are in the process of construction or completion.
Cash Cash comprises cash on hand and demand deposits with banks
Cash equivalents Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
Cash Basis of Accounting The method of recording transactions by which revenues and costs and assets and liabilities are reflected in the accounts in the period in which actual receipts or actual payments are made.
Cash Discount A reduction granted by a supplier from the invoiced price in consideration of immediate payment or payment within a stipulated period.
Cash Profit The net profit as increased by non-cash costs, such as depreciation, amortization, etc. When the result of the computation is negative, it is termed as cash loss.
Carrying amount Carrying amount is the amount at which an asset is recognized in the balance sheet, net of any accumulated amortization and accumulated impairment losses thereon.
Charge An encumbrance on an asset to secure an indebtedness or other obligations. It may be fixed or floating.
Cheque A bill of exchange drawn upon a specified banker and not expressed to be payable otherwise than on demand.
Collateral Security Security which is given in addition to the principal security against the same liability or obligation.
Costs of disposal Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.
Contingency A contingency is a condition or situation, the ultimate outcome of which, gain or loss, will be known or determined only on the occurrence, or non-occurrence, of one or more uncertain future events.
Contingent Asset An asset the existence, ownership or value of which may be known or determined only on the occurrence or non-occurrence of one or more uncertain future events. PRINCIPLES AND PRACTICE OF ACCOUNTING
Contingent Liability An obligation relating to an existing condition or situation which may arise in future depending on the occurrence or non-occurrence of one or more uncertain future events.
Contra Account One or two or more accounts which partially or wholly off-set another or other accounts.
Cost The amount of expenditure incurred on or attributable to a specified article, product or activity.
Cost of Purchase The purchase price including duties and taxes, freight inwards and other expenditure directly attributable to acquisition, less trade discounts, rebates, duty drawbacks, and subsidies in respect of such purchase.
Cost of Goods Sold The cost of goods sold during an accounting period. In manufacturing operations, it includes (i) cost of materials; (ii) labour and factory overheads; selling and administrative expenses are normally excluded.
Conversion Cost Cost incurred to convert raw materials or components into finished or semi-finished products. This normally includes costs which are specifically attributable to units of production, i.e., direct labour, direct expenses and subcontracted work, and production overheads as applicable in accordance with either the direct cost or absorption costing method. Production overheads exclude expenses which relate to general administration, finance, selling and distribution.
Convertible Debenture A debenture which gives the holder a right to its conversion, wholly or partly, in shares in accordance with the terms of issue.
Cumulative Dividend A dividend payable on cumulative preference shares which, if unpaid, accumulates as a claim against the earnings of a corporate enterprise, before any distribution is made to the other shareholders.
Cumulative Preference Shares A class of preference shares entitled to payment of cumulative dividends. Preference shares are always deemed to be cumulative, unless they are expressly made non-cumulative.
Current Assets Cash and other assets that are expected to be converted into cash or consumed in the production of goods or rendering of services in the normal course of business.
Current Liability Liability including loans, deposits and bank overdraft which falls due for payment in a relatively short period, normally not more than twelve months.
Deferral Postponement of recognition of a revenue or expense after its related receipt or payment (or incurrence of a liability) to a subsequent period to which it applies. Common examples of deferrals include prepaid rent and taxes, unearned subscriptions received in advance by newspapers and magazine selling companies, etc.
Deficiency The excess of liabilities over assets of an enterprise at a given date. The debit balance in the profit and loss statement.
Deficit The debit balance in the profit and loss statement.
Depletion A measure of exhaustion of a wasting asset represented by periodic write off of cost or other substituted value.
Depreciation Depreciation is a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of the depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortisation of assets whose useful life is predetermined.
Depreciable amount Depreciable amount of a depreciable asset is its historical cost, or other amount substituted for historical cost in the financial statements, less the estimated residual value.
Depreciable assets Depreciable assets are assets which (i) are expected to be used during more than one accounting period; and (ii) have a limited useful life; and (iii) are held by an enterprise for use in the production or supply of goods and services, for rental to others, or for administrative purposes and not for the purpose of sale in the ordinary course of business.
Depreciation Method Any method of calculating depreciation for an accounting period.
Depreciation Rate A percentage applied to the historical cost or the substituted amount of a depreciable asset (or in case of diminishing balance method, the historical cost or the substituted amount less accumulated depreciation).
Diminishing Balance Method A method under which the periodic charge for depreciation of an asset is computed by applying a fixed percentage to its historical cost or substituted amount less accumulated depreciation (net book value). This is also referred to as written down value method.
Discount A reduction from a list price, quoted price or invoiced price. It also refers to the price for obtaining payment on a bill before its maturity.
Dividend A distribution to shareholders out of profits or reserves available for this purpose.
Entity Concept The view of the relationship between the accounting entity and its owners which regards the entity as a separate person, distinct and apart from its owners.
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