Accounting Principles and Financial Statements

These flashcards cover the key vocabulary and concepts of general accounting including the definitions of business types, financial statements (Balance Sheet, Income Statement), the double-entry system, VAT mechanisms, and year-end inventory adjustments like depreciation and provisions.

Enterprise (Company)

An economic agent whose function is to produce or transform goods or services to sell them and derive a profit.

Self-financing

The use of profit to finance future investments within the company.

Dividends

The remuneration paid to capital contributors from the company's profits.

Agricultural Enterprise

A company that produces raw materials from natural resources.

Trading Enterprise (Négoce)

A company that resells goods in their current state without transformation.

Industrial Enterprise

A company that manufactures goods from raw materials or provides services based on specialized know-how.

Natural Person (Personne physique)

A human individual with legal personality where the company is legally inseparable from the individual creator, leading to a confusion of assets.

Legal Person (Personne morale)

An independent legal entity created at the same time as the company, having its own rights and obligations distinct from the individuals who compose it.

Majority Shareholder

The individual or entity holding power of decision, typically defined as owning $50\% + 1$ share of the capital.

GAEC

Groupement Agricole d’Exploitation en Commun.

SCEA

Société Civile d’Exploitation Agricole.

Micro-BA

A fiscal regime for agricultural operators whose average revenue is less than or equal to $129,200\,\text{€}$.

Accounting (Comptabilité)

A financial information organization system used to capture, classify, and record numerical data to present a faithful image of assets, financial situation, and results.

Balance Sheet (Bilan)

A periodic snapshot of a company's heritage, listing what it owns (Assets) and what it owes (Liabilities) to verify that $\text{Assets} = \text{Liabilities}$.

Asset (Actif)

The left side of the balance sheet representing the uses of funds or what the company possesses.

Liability (Passif)

The right side of the balance sheet representing the resources of funds or the company's debts to third parties and shareholders.

Income Statement (Compte de rsultat)

A mandatory document describing the performance of the company over one year by calculating the difference between products and charges.

Charges

The consumption of goods and services necessary for the company's activity, represented as in-flows in the income statement.

Products (Produits)

The internal resources or wealth generated by the company's activity, represented as out-flows in the income statement.

Intangible Fixed Asset (Actif immobilis incorporel)

Immaterial elements such as patents, licenses, and D.P.B. (Payment Entitlements).

Current Asset (Actif circulant)

Short-term assets including stocks, receivables (crances), and available cash (disponibilits).

Equity (Capitaux propres)

Financing belonging to the company but due to associates, including capital, reserves, and the current result.

Amortization (Amortissement)

The annual accounting of the consumption of a fixed asset's value over its estimated useful life.

VAT (T.V.A.)

Taxe sur la Valeur Ajoute; a general tax on consumption billed to customers and collected by companies for the State.

Output VAT (TVA collecte)

VAT collected by the company from its customers, which must be returned to the State.

Input VAT (TVA dductible)

VAT paid by the company to its suppliers on purchases or investments, which can be recovered from the State.

Economic Flow

The movement of goods, services, or monetary values between two economic agents.

Double-entry Principle (Partie double)

The accounting convention where every operation results in equal sums of in-flows (debits) and out-flows (credits).

Journal

An accounting book where all operations are recorded chronologically day by day.

General Ledger (Grand livre)

A collection of all "T" accounts that accumulates and summarizes the totals from the journal.

Trial Balance (Balance)

A control document used to verify that the total debits equal total credits and to facilitate the creation of financial statements.

Stock Variation (Charges)

Calculated as $\text{Initial Stock} - \text{Final Stock}$, where a positive result indicates destocking.

Stock Variation (Products)

Calculated as $\text{Final Stock} - \text{Initial Stock}$, where a positive result indicates storage.

Linear Amortization Formula

$$\text{Annual Allocation} = \frac{\text{Origin Value}}{\text{Number of years of use}}$$

Declining Balance Amortization

A method calculated by multiplying the linear rate by a fiscal coefficient (e.g., $1.75$ for $5$ to $6$ years) based on the net book value.

Prudence Principle

The accounting rule requiring companies to account for any risk or probable event that might decrease the value of their assets.

Impairment (Dprciation)

The recognition of a probable and reversible loss of value when the current value of an asset is lower than its net book value.