Structure of Statements and Key Accounting Concepts

A compilation of key vocabulary terms and their definitions related to accounting principles, specifically focusing on financial statements and concepts.

Accounting Conversions

Transformations and adjustments made in financial accounting to ensure accurate representation of data.

Assets

Resources controlled by an entity from which future economic benefits are expected.

Liabilities

Present obligations of an entity expected to result in an outflow of resources.

Equity

Residual interest in the assets of the entity after deducting liabilities.

Income

Inflow of resources resulting from the operations of the entity.

Expenses

Outflows of resources incurred in the process of generating revenue.

Current Assets

Assets expected to be realized or consumed within the next 12 months.

Non-Current Assets

Assets not expected to be realized or consumed within the next 12 months.

Current Liabilities

Liabilities due to be settled within the next 12 months.

Non-Current Liabilities

Liabilities not due to be settled within the next 12 months.

Going Concern

Assumption that an entity will continue to operate for the foreseeable future.

Accrual Accounting

Recognition of revenue and expenses when they are incurred, regardless of cash flow.

Prudence Concept

Caution in making accounting judgments, avoiding the overstatement of income and assets.

Measurement Basis of Assets

Determination of the value of assets based on cost or market value.

Statement of Profit or Loss (SPL)

Financial statement providing summary of revenues and expenses over a specific period.

Statement of Financial Position (SFP)

Snapshot of the entity's assets, liabilities, and equity at a specific point in time.

Financial Reporting Standards (FRS)

Guidelines for preparing and presenting financial statements.

Cash Accounting

Recognition of revenue and expenses when cash is exchanged.

Accruals vs Cash Accounting

Accruals recognizes income and expenses when they are earned or incurred; cash accounting does so when cash is exchanged.