FA-H1

Accounting

A system that collects and processes financial information about an organisation and reports that information to decision-makers.

Accounting Entity

The organisation for which financial data is to be collected, treated as a separate entity for accounting purposes.

Accounting Period

The time period covered by the financial statements.

Assets

Economic resources of a company, can be current or noncurrent.

Balance Sheet

A financial statement reporting the financial position of an accounting entity at a specific point in time.

Cash Flow Statement

A financial statement that reports the inflows and outflows of cash for a specific period.

Creditors

Lenders who provide funds to a company and assess its ability to repay debts using financial statements.

Current Assets

Assets that will be used or turned into cash within the upcoming year.

Current Liabilities

Obligations that will be paid or settled within the next 12 months.

Dividends

Cash payments made to stockholders from a company’s earnings.

Expenses

The costs of operating a business incurred to generate revenue.

Financial Accounting

Accounting focused on providing information for external decision-makers.

Financial Statements

Summarise the financial activities of a business and provide information about its financial position.

Generally Accepted Accounting Principles (GAAP)

The rules and guidelines for preparing financial statements.

Going Concern Assumption

The assumption that a business will continue operating into the foreseeable future.

Income Statement

A financial statement that reports a company's financial performance over a period, including revenues and expenses.

Investors

Individuals or entities that purchase stock hoping to receive dividends and sell their shares at a higher price.

Liabilities

Obligations of a company to creditors, can be current or long-term.

Management Accounting System

Generates information for internal decision makers, such as managers.

Monetary Unit Assumption

The assumption that each business entity reports its financial results in terms of the national monetary unit.

Net Income

The profit of a company after deducting all expenses from revenues.

Noncurrent Assets

Assets that will last longer than one year.

Noncurrent Liabilities

Obligations not classified as current liabilities.

Retained Earnings

The accumulated profits of a company that have not been distributed to stockholders as dividends.

Revenues

The income generated by a company from its business activities.

Separate Entity Assumption

The principle that a business's financial activities must be kept distinct from those of its owners.

Statement of Stockholders' Equity

A financial statement that reports the changes in a company's equity accounts over a period.

Stockholders' Equity

The owners’ stake in a company representing the residual interest in the assets after deducting liabilities.

Stockholders (Shareholders)

Owners of a corporation who receive shares of stock and have a voice in management.

Transaction

An event that has an economic impact on an entity and is recorded in the accounting process.