Flashcards
CIMA C02 Key Terms
Flashcards do conjunto (71)
- 1Financial accountingThe preparation of acounting reports for external use
- 2Management accountingThe preparation of accounting reports for internal use
- 3CapitalA special form of liability, representing the amount owed by the business to its proprietors; the excess of its assets over its liabilities
- 4BusinessAn organisation which sells something or provides a service with the objective of profit
- 5Limited liabilityThe liability of a shareholder to the company is limited to any unpaid amounts for shares issued by the company to the shareholder
- 6AssetSomething valuable which the business owns; this in effect represents a right of the business to future economic benefits
- 7LiabilitySomething which is owed to someone else
- 8Tangible assetsAssets with a physical presence, aka property, plant and equipment
- 9Intangible assetsAssets with no physical presence, aka intellectual property
- 10DrawingsAmounts taken out of a business by its owner
- 11PayableA person to whom a business owes money and is therefore a liability of a business
- 12ReceivableA person who owes money to the business and is therefore an asset of the business
- 13Current liabilitiesDebts of the business that must be paid within a fairly short period of time, by convention normally a year
- 14Non-current liabilityDebt not payable within the 'short term', so any liability not current must be long-term
- 15Tangible non-current assetPhysical asset, has real 'solid' experience
- 16Intangible non-current assetAsset with no physical existence, cannot be 'touched'
- 17Current assetEither (a) items owned by the business with the intention of turning them into cash within one year; or (b) cash, inc money in the bank, owned by the 'business'
- 18Income statementA statement showing in detail how the profit (or loss) of a period has been made
- 19Gross profitThe difference between the value of sales and the cost of the goods sold
- 20Net profitGross profit + Income from other sources - Other business expenses
- 21Sales day bookLists all invoices sent out to customers
- 22Purchase day bookLists all invoices received from suppliers
- 23Sales returns day bookLists goods (or services) returned (or rejected) by customers for which credit notes are issued
- 24Purchase returns day bookLists goods (or services) returned to suppliers (or rejected) for which credit notes have been received or are expected
- 25Nominal ledgerAn accounting record which summarises the financial affairs of a business; contains accounts for each asset, liability, capital, income, expenditure and profit and loss
- 26JournalRecord of unusual transaction; used to record any double entries made which do not arise from the other books of prime entry
- 27Going concernImplies business will continue in operation for the foreseeable future and that there is no intention to put the company liquidation or to make drastic cutbacks to the scale of operations
- 28Accruals conceptStates that in computing profit, amounts are included in the accounts in the period when they are earned or incurred, not received or paid
- 29PrudenceConcept that specifies in situations where there is not uncertainty, appropriate caution is exercised in recognising transactions in financial records
- 30Consistency concept states that in preparing accounts consistency should be observed in two respects:(a) Similar items items within a single set of accounts should be given similar accounting treatment, (b) the same treatment should be applied from one period to another in accounting for similar items
- 31MaterialityA matter is material if its omission or misstatement would reasonably influence the decisions of a user of the accounts
- 32Substance over formThe principle that transaction and other events are accounted for and presented in accordance with their substance and economic reality and not merely their legal form
- 33Entity conceptAccountants regard a business as a separate entity, distinct from its owners or managers
- 34Money measurement conceptAccounts deal only with items to which a monetary value can be attributed
- 35Accruals or accrued expensesCurrent liabilities, expenses which are charged against the profit for a particular period, even though they have not yet been paid for
- 36PrepaymentsPayments which have been made in one accounting period, but should not be charged against profit under a later period, because they relate to that later period
- 37DepreciationThe measure of the cost or revalued amount of the economic benefits of the tangible non-current asset that have been consumer during the period
- 38Net book valueCost less depreciation to date
- 39Depreciable amountTotal amount to be charged over the life or a non-current asset, usually its cost less any expected 'residual' sales or disposal value at the end of its life
- 40Straight line methodMeans that total depreciable amount is charged in equal instalments to each accounting period over the expected useful life of the asset
- 41Reducing balance method of depreciationCalculates the annual charge as a fixed percentage of the net book value of the asset, as at the end of the previous accounting period
- 42The profit or loss on the disposal of a non-current assetThe difference between net book value of the asset at the time of sale and net sale price (price minus any costs of making the sale); profit made when sales price > NBV
- 43Non-current assets registerListing of all non-current assets owned by the organisation, broken down perhaps by department, location or asset type
- 44Intangible assetAn identifiable non-monetary asset without physical substance; must be controlled by entity as a result of events in the past and something from which the entity expects future economic benefits to slow
- 45ResearchOriginal and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding
- 46DevelopmentApplication of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services prior to the commencement of commercial production or use
- 47AmortisationSystematic allocation of the depreciation of the depreciable amount of an intangible asset over its useful life; amortisation period and method should be reviewed at each financial year end
- 48Depreciable amountThe cost of an asset or other amount substituted for cost, less its residual value
- 49Useful life(a) the period over which an asset is expected to be available for use by an entity or (b) the number of production or similar units expected to be obtained from the asset by an entity
- 50CarriageRefers to the cost of transporting purchased goods from the supplier to the purchaser; carriage inwards = purchaser pays, outwards = supplier
- 51Net realisable valueSales value less any costs that will be incurred in making the sale
- 52First in, first out (FIFO)Assumes that materials are issued out of the inventor in the order in which they were delivered into inventory, ie issues are priced at the cost of the earliest delivery remaining in inventory
- 53Average costEach component is assumed to have been purchased at the weighted average price of all components in the bin at that moment; issues are priced at this average cost
- 54LIFO (last in, first out)Components issued to production formed part of the most recent delivery, inventories are the oldest receipts
- 55Standard costA pre-determined standard cost is applied to all inventory items; if this standard price differs from price actually paid during the period, the difference is written off as a 'variance' in the income statement
- 56Replacement costAssumed that the cost at which a inventory unit was purchased is the amount it would cost to replace it
- 57Unpresented chequesCheques set out which do not yet appear on the statement
- 58Uncleared logementsCheques received and paid into the bank which do not yet appear on the statement
- 59DiscountReduction in price of goods
- 60Trade discountReduction in the cost of goods resulting from the nature of the trading transaction; usually results from buying goods in bulk
- 61Cash discountReduction in the amount payable to the supplier in return from immediate payment rather than credit
- 62Settlement discountDiscount on the price of goods purchased for credit customers who pay their debts promptly, similar to cash discount
- 63Output sales taxSales tax charged on goods and services sold by a business
- 64Input sales taxSales tax paid on goods and services 'brought in' by a business
- 65Error of transpositionWhen a number of digits in an amount are accidentally recorded the wrong way round
- 66Error of omissionMeans a failing to record a transaction at all, or making one entry but not the corresponding double entry
- 67Error of principleInvolves making a double entry in the belief that the transaction is being entered in the correct accounts, but subsequently finding out that the accounting entry breaks the 'rules' of an accounting principle or concept
- 68Errors of commissionWhere the bookkeeper makes a mistake in recording transactions in the accounts
- 69Compensating errorsErrors which are, coincidentally, equal and opposite to each other
- 70Suspense accountTemporary account which is opened because either: (a) a trial balance does not balance or (b) the bookkeeper does not know where to post one side of a transaction
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- FlashCards sobre CIMA C02 Key Terms, criado por nacnim em 29-11-2015.
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