Introduction to Financial Statements and Accounting Concepts

Vocabulary flashcards covering core accounting terms, financial statements, asset classifications, and tax concepts from Chapter 1 to Chapter 6.

Accounting

The process of identifying, analyzing, reporting, summarizing, and communicating economic events of a business to permit informed judgments and decisions by various users of information.

Management Accounting

Accounting information designed specifically for internal use within an organization.

Drawings

Products, inventory, or items taken directly from the business by the owner for personal use.

Non-current Assets

Long-term assets owned and controlled by a business to help generate future benefits, such as plant and machinery, buildings, land, tables, and computers.

Current Assets

Short-term assets owned by a business that are held for sale or consumed in operations, such as stock or inventory.

Liabilities

Obligations of a business representing debts or amounts that the business is liable to pay in the future.

Income Statement

A financial report, also known as the profit and loss account, that details a business's revenue and expenses for a specific period.

Revenue

The income generated by a business for a specific period from sales or turnover.

Expenses

The costs of running a business for a specific period, described as expired assets that are consumed during operations.

Net Profit

The financial gain obtained when total revenue exceeds total expenses over a specific period.

Personal Allowance

The amount of individual income that can be earned tax-free, specified as $12,570$ in the lecture.

Business Entity Concept

The accounting principle that a business exists as a separate legal and financial entity distinct from its owner once capital is transferred to it.