A Level Accounting Key Terms and Vocabulary

Vocabulary flashcards defining fundamental accounting concepts, stages, financial reports, and classified asset, liability, capital, income, and expense items.

Accounting (American Accounting Association, 1966)

The process of identifying, measuring and communicating economic information about an organisation or other entity, in order to permit informed judgements by users of the information.

Transactions

The process of buying or selling and making payment at a certain date.

Source Documents

The proof or record that a transaction has taken place.

Assets

Things owned by the business.

Liabilities

Things or debts owed by a business.

Income

Money the business receives in exchange for providing 'goods' or 'services'.

Capital

The money the owner has put into the business, which is owed to the owner by the business.

Expenses

Money the business spends to provide 'goods' or services.

Financial Statements

A financial report of the financial activities and position of a business at a certain date.

Income Statement

A Financial Statement which measures the performance of a business as it relates to the business Income and Expenses and the profit or loss earned during a financial year.

Statement of Financial Position

A financial Statement which shows the assets, liabilities and capital of the business at a certain date, displaying the financial position of the business.

Accounting Period

A financial year with 12 consecutive months which can start on any day of the calendar year.

Verification of the Accounts

Arithmetic checking of double entry book-keeping to ensure the evidence actually happened and the arithmetic is correct.

Government Grant

Money given by the government to a business for specific activities.

Corporation Tax

Business tax paid on the profits or activities of a business.

Bank Balance

The amount of money held at the bank at a particular point in time.

Sundry Expenses

A collection of small expenses that are not listed individually.

Sales

The sales of goods or services to customers.

Discount Received

Discount (money off the price) given by a supplier to the business for early repayment of monies owed.

Carriage Outwards

The cost to the company of taking its products to its customers.

Drawings

When the owner takes cash or goods from the business and therefore reduces the capital in the business.

Purchases

When the business buys goods to sell (classified as a type of expense).

Interest Received

Interest received by the business on its money on deposit at the bank.

Discount Allowed

Discount (money off the price) given by a business to a customer for early repayment of monies owed.

Bank Overdraft

A short term credit facility given to the business by a bank which allows the business to spend more than it has in its bank account up to an agreed limit.

Trade Payables

Businesses owed money to for items purchased.

Mortgage

A long term loan borrowed by the business to allow it to purchase property, paid back in instalments.

Cash in Hand

Money the business has in the till/safe at its place of business.

Carriage Inwards

The cost to the company of bringing products to its place of business.

Bank Charges

Costs to the business from its bank for the running of the business current account.

Rates

A tax on business to cover public services such as street lighting, bin collections, etc.

Commission Received

Income received by the business for making sales on behalf of another company.

Inventory

Goods purchased by the business to sell on to customers.

Bank Loan

A long term loan borrowed by the business over a set period of time paid back in instalments.

Trade Receivables

Customers who owe the business money for goods sold to them.