707208
Flashcards by Ray Welland, updated more than 1 year ago
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Created by Ray Welland
about 7 years ago
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Description
| Question | Answer |
| Financial Accounting | Collection, analysis and communication of accounting information to interested parties within a regulated reporting framework |
| Management Accounting | Seeks to meet mainly the needs of managers. Accounting information to enable short term decision making. (Break-even analysis, costing & budgeting, variance analysis) |
| Financial Management | Ways in which funds for a business are raised Investment appraisal and long term decision making |
| Entity | Is jargon term used by accountants to describe any type of organization |
| Financial performance | Is usually judged by matching incomes received with expenditure incurred over a period of time (usually one year) |
| Assets | Are regarded as being something that will result in a future economic benefit as a result of a past event. For example the purchase of plant and machinery will provide a benefit over many years |
| Liabilities | Is defined as an obligation arising as a result of a past event. For example you may have bought some furniture but you do not have to start paying for it until next year. So for the time being, what you owe is a debt or an obligation, i.e. liability |
| Capital | Describes the amount that the owners have invested in an entity. In effect, 'capital' is the amount owed by the entity to its owners. |
| Private Company | LTD Limited Liability Company |
| Public Company | PLC Public Limited Company |
| Double Entry System | Transactions are entered in the books of account using the “double entry” system. This means everything is entered twice - once as a debit and then again as a credit |
| Debit | meaning to receive, or value received |
| Credit | meaning to give, or value given |
| What the entity owns/possesses | Assets = Capital + Liabilities |
| Trial Balance | At the end of the period a trial balance is produced to ensure the arithmetic accuracy of the double entries - the sum of the debit balances should equal the sum of the credit balances |
| Capital expenditure | likely to provide a benefit for more than one accounting period e.g. the expenditure to buy an asset (machine) |
| Revenue expenditure | is expenditure that is expected to provide a benefit for only one specific accounting period e.g. electricity, insurance |
| Capital income | includes the finance provided by the owners and long term loans |
| Revenue income | includes income from sales, dividends and rents |
| Income Statement/Profit and Loss Account | Consumption of cost of sales and expenses during the period. Sales invoices raised during the period |
| Balance Sheet | Statement of position. Investors. Assets, capital and liabilities at the year-end |