IB1 Chapter 19 Accounting and Financial statements

income

all the money received from business activities during a given period

expenditure

all the money that a business spends on goods or services during a given period

budget

a financial operating plan showing expected income and expenditure

assets

anything owned by a business – cash, buildings, machines, equipment, etc.

liabilities

all the money that a company will have to pay to someone else in the future including debts, taxes, and interest payments

accrued

adjective describing a liability which has been incurred but not yet invoiced to the company

debit

an entry in an accounting, recording a payment made

credit

an entry in an accounting, recording a payment received

intangible

adjective describing something without a material existence, which you can't touch

deferred

delayed or postponed until a later time

cost accounting

calculating all the expenses involved in producing something, including materials, labor, and all other expenses

tax accounting

calculating how much an individual or a company will have to pay to the local and national governments and trying to reduce this to a minimum

auditing

inspecting and reporting on accounts and financial records

accounting

preparing financial statements showing income and expenditure, assets and liabilities

management managerial accounting

providing information that will allow a business to make decisions, plan future operations, and develop business strategies

creative accounting

using available accounting procedures and tricks to disguise the true financial position of a company

bookkeeping

writing down the details of transactions debits and credits

shareholder's equity

all the money belonging to the company's owners

intangible assets

assets whose value can only be turned into cash with difficulty e.g. reputation, patent, trade marks, etc.

additional paid-in capital

capital that shareholders have contributed to the company above the nominal or par value of the stock

accrued expense

expenses such as wages, taxes, and interest that have not yet been paid at the date of the balance sheet

receivables

money owed by customers for goods or services purchased on credit

accounts payable

money owed to suppliers for purchases made on credit

prepaid expense

a payment of an expense in advance

retained earnings

profits that have not been distributed to the shareholders

PPE

tangible assets such as offices, machines, etc.

goodwill

the difference between the purchase price of acquired companies and their net tangible assets

total liabilities

the total amount of money owed that the company will have to pay out

financial statements

compiled reports of the business reflecting the financial activities as well as the growth health of the business

statement of financial position

refers to a report summarizing the total amount of assets, liabilities, and equity at a specific time and date

statement of profit or loss

refers to a report summarizing the total amount of expense and revenue over a period of time

statement of cash flow

refers to a report showing where the cash is coming from and where it is going while operating the business