Key terms, flash cards

Question	Answer
Capital	This is money the owner has invested in the business and any profits they have not drawn out of the business throughout the financial year.
Fixed Assets (FA)	Items purchased by the business to help it to operate. Have a life expectancy of more than one year.
Current Assets (CA)	Items owned by the business but have a life expectancy of less than one year.
Drawings	This is the money the owner(s) of a sole trader/partnership takes out of the business in order to pay off their living expenses
Long Term Liabilities (LTL)	This consists of money the business owes to external parties which have repayment period of longer than one year.
Current Liabilities (CL)	These are the debts of the business - the money the business owes to other people.
Creditors	If the business has purchased goods on credit these supplier become creditors of the business.
Debtors	Customers who have received goods on credit and will have to pay for them in the future.
Stock	Items that have been purchased for resale within a financial year but have not yet been sold.
Bank Overdraft	If the business is spending the bank's money the bank balance becomes a CL, as the business must at some stage pay the money back to the bank.
Bank	This is the money the business has in its business bank account (Credit balance)
Cash	This is notes and coins the business has available to spend.
Net Profit	The actual profit after working expenses not included in the calculation of gross profit have been paid.
Gross Profit	Gross profit is a company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.
Break Even	The point or state at which a person or company breaks even.
Purchase Order	Form used to purchase goods.
Delivery Note	Come with order.
Goods Received Note	To check order delivered is correct and in good condition.
Invoices	To get money for goods / services sold.
Credit Note	To refund damaged or non received goods.
Statements of Account sent by the Business	Summary of invoices / credit notes
Remittance advice slips	To attach to payment
Cheques	A form of payment
Receipts	Confirmation of money received
Credit Card	A small plastic card issued by a bank, building society, etc., allowing the holder to purchase goods or services on credit.
Debit Card	A card allowing the holder to transfer money electronically from their bank account when making a purchase.
Credit transfer / direct debit	An arrangement made with a bank that allows a third party to transfer money from a person's account on agreed dates, typically in order to pay bills.
Income	Money received, especially on a regular basis, for work or through investments.
Expenditure	An amount of money spent.
Opening Balance	The opening balance is the first entry in a firm's accounts, either when they are first starting up or at the start of a new financial year. The opening balance can be found on the credit or debit side of the ledger, depending on whether or not the firm has a positive or negative balance.
Closing Balance	A closing balance is the amount remaining in an account within your chart of accounts, positive or negative, at the end of an accounting period or year end. It's easy to stay on top of the balance of your accounts with online accounting software like Debtor.
Total Costs	Total cost refers to the total expense incurred in reaching a particular level of output; if such total cost is divided by the quantity produced, average or unit cost is obtained. A portion of the total cost known as fixed cost—e.g., the costs of a building lease or of.
Break even formula	Break even = Fixed costs ÷ Sales price per unit - Variable cost per unit
Sales	The exchange of a commodity for money; the action of selling something.
Cost of Sales	Cost of goods sold are the direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good.

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	Created by toby solomon over 7 years ago