VERIFICATION and ACCOUNTING ADJUSTMENTS

FLASHCARDS

rial Balance: A statement listing the debit and credit balances extracted from the ledger accounts on a given date to check mathematical accuracy.

Bank Reconciliation Statement: A report prepared to reconcile differences between the balance in the Cash Book bank column and the balance on the Bank Statement on a specific date.

Control Account: A summary account in the general ledger that mirrors individual balances in subsidiary ledgers (e.g., Sales Ledger Control Account) to check accuracy and detect errors.

Capital Expenditure: Money spent to purchase, extend, or improve non-current assets, including costs required to get the asset ready for use (e.g., delivery or installation costs).

Revenue Expenditure: Day-to-day operating expenses incurred in running the business and maintaining non-current assets (e.g., rent, repairs, insurance).

Capital Receipt: Funds received from non-trading activities, such as selling a non-current asset or introducing additional owner capital.

Revenue Receipt: Income generated from normal, everyday trading activities (e.g., sales revenue, rent received).

Depreciation: The systematic allocation of the depreciable amount of a non-current asset over its estimated useful life.

Accrual (Accrued Expense): An expense that has been incurred during an accounting period but has not yet been paid by the end of that period.

Prepayment (Prepaid Expense): An expense paid during the current accounting period that relates to a future accounting period.

Irrecoverable Debt (Bad Debt): An amount owed by a trade receivable that is considered uncollectible and written off as an expense.

Provision for Doubtful Debts: An estimate of the percentage of trade receivables that a business expects may default on payment in the future.