A person whom is trained and knowledgeable in the profession of Accountancy and understands the rules and laws that govern it.
Refers to anything of value, that can be tangible (furniture, plant And equipment) or intangible (goodwill, patent). Assets may be owned or controlled by a business or individual and is seen as something that provides a future benefit.
The process of examining financial records in order to verify their accuracy and existence.
When all debits are added together and all credits are subtracted from the debits – the amount that results is the balance. The purpose is to that total debits are equal to total credits.
The balance sheet refers to a statement that shows the financial position of a business or organization at a specific date in time.
The balance sheet contains the assets, liabilities and ownership (equity) of the business.
a process that accounts for the difference between the balance shown on the bank statement and the balance shown in the accounting records on a specific date. The bank reconciliation is used to identify where the differences are and to make appropriate adjustments to the accounting records.
A legal term that refers to a person or business who is unable to pay their debts.
The recording of financial transactions both in an electronic or manual format, that work in support of the accounting process.
A forecast of cash flows with consideration to incoming cash as in revenues and outgoing cash, as in expenses. Budgets are often established within a one year operating cycle and reflect on past periods for financial data.
CAPITAL (OR EQUITY)
The excess of total assets over total liabilities due to outside interests.
The assets that are either tangible or intangible in nature that are owned or held by business and are expected to be used or held over several fiscal periods. Also called a fixed asset.
Is the opposite of debit and appears as an increase in liability, owner’s equity or revenue and as a reduction in assets or expenses.
A credit note is issued by a seller to a purchaser if the purchaser returns an item or is granted a discount of a bill.
A current asset is the use of an asset which is expected to be converted into cash or used in the production of income within the greater of one year and the regular operating cycle.
A current liability is expected to be liquidated in the greater of one year or the regular operating cycle.
Is the opposite of credit and appears as an increase in an asset or expense and as a reduction in liabilities, owner’s equity or revenue.
This is represented as a negative amount (debit balance) of retained earnings as caused by cumulative losses and dividend distributions exceeding cumulative net income.
Refer to capital.
To achieve the greatest good or cause the least harm is the basis of ethics. To review conflicting alternatives and devise the best conclusion.
When a liability is incurred as a result or use of an asset and/or the payment of expense.
The formal financial reports that are derived from the accounting records. They include the balance sheet, income statement and statement of retained earnings.
The fiscal year is a one year period for which financial statements are prepared that may or may not coincide with the calendar year.
Refer to capital assets.
The journal where financial transactions are recorded.
The ledger where all the assets, liabilities, equity, revenue, cost of sales and expenses are posted. Financial statements are prepared from this point.
Everything that relates to the employees of a business, including the hiring, training, retention, duty assignment and dismissal.
Money earned by a business in return for goods or services provided.
A financial statement that shows revenues, cost of sales and expenses or a stated period of time.
Tax levied on the income of the business.
The inability to pay debts when due – when liabilities exceed assets.
An asset without physical substance that has ownership value for example, patents, goodwill and trademarks.
A total system of procedures and techniques that are designed to safeguard the business assets. Promoting efficiency to a set of policies in order to ensure the accuracy of accounting records is key.
The stock of tangible goods the business has for sale. This can include raw materials, work-in-progress and finished products in transit.
The use of money to acquire tangible or intangible assets that will provide a rate of return in either revenue or for their use.
A document that presents details of goods purchased or services rendered. Details such as price, quantities, order numbers, etc. are shown.
The book of original entry for a recorded financial transaction.
An entry into a journal.
A legal contract that allows for the use of property from the owner (lessor) to another party (lessee) for a stated length of time and price.
The final book of entry that contains all of the accounts of a business.
An amount that is owed. An obligation exists to either pay immediately or at some point in the future.
Refers to assets, particularly cash that can be readily converted into other types of assets and used to buy goods and services or to pay liabilities.
The excess of expenses over revenues.
The highest price that an owner of an asset can realize in an open market transaction.
NET BOOK VALUE
The cost of an asset minus its accumulated depreciation.
The excess of total revenue over total expenses for a certain period of time.
Referred to as capital or equity and includes the total assets
Minus total liabilities.
NOTE PAYABLE (PROMISSORY NOTE)
A written promise made by one person or business to another that is payable on a specific date for a specific amount.
A written promise made by one person or business to you that will be paid on a specific date for a certain amount.
This is the normal business cycle and indicates a one year time frame. However, some industries can have a longer cycle if they are engaged in construction work.
All of the costs associated with the production of goods or services but now including direct costs.
Any obligation to pay an amount at a future date.
The recording of wages/salaries that are already paid or are payable. The payroll shows the actual salaries paid during a specific period.
The process of transferring transactions from a journal to a general or subsidiary ledger.
The excess of total revenue over total expenses for a certain period of time. Also called net income.
PROPERTY, PLANT AND EQUIPMENT
Refers to capital assets that are tangible (having real substance) and include land, buildings, equipment, furniture and automobiles.
An amount to be received at a future date from customers/clients.
Refers to the cumulative net incomes of a corporation, minus losses and dividend distributions to shareholder (profits that have not been distributed).
The total gross proceeds from the sale of goods or services. It also includes the interest and dividends earned on investments. Revenue is a source of income.
The listing and totalling of all balances in the ledger to verify that total debits equal total credits.