Year 10 Commerce: Accounting & Sources of Finance

Vocabulary practice flashcards covering introductory accounting concepts, sources of finance, GST, journals, reports, and the accounting equation for Year 10 Commerce.

Accounting

The process of recording financial events, reporting on these events, and providing accurate information to support sound financial decisions.

Entity

A business.

Transactions

Events where money is exchanged for goods or services.

Source Document

The physical evidence (pieces of paper) that a transaction took place, providing details and proof of the transaction.

Assets

Items or resources owned and controlled by a business from which future economic benefits (earning money) are expected.

Liabilities

Debts and obligations the business has to pay back for borrowed funds or goods and services not yet paid for.

Owner's Equity

The residual interest in the assets of the entity after liabilities are deducted; the owner's remaining claim on the business once debts are paid.

Revenue

Money earned from providing a service or selling items.

Expenses

Money spent buying items, preparing items for sale, or providing a service (e.g., wages, electricity, water, and fuel).

Owner Contribution (Capital Contribution)

When the owner contributes their own savings or money into the business bank account at establishment or throughout its life.

Trade Credit

A facility offered by suppliers that allows customers to purchase goods or services immediately and pay for them at a later date.

Bank Loan

Funds provided by a bank or other lender for a specific purpose that are repaid over time.

Retained Earnings

Money kept in the business once trading begins to purchase assets (such as stock or new equipment) or to pay off future debts.

The Accounting Process

The four-step sequence consisting of collecting Source Documents, Recording in journals, preparing Reports, and providing Advice.

Goods and Services Tax (GST)

A compulsory broad-based tax of $10\%$ payable to the Australian Taxation Office that applies to most goods and services in Australia.

Cash Receipts Journal

An accounting record that summarises all cash received into the business from other entities over a period of time.

Cash Payments Journal

An accounting record that summarises all cash paid out of the business to other entities over a particular time period.

Sundries

A column used in accounting journals to record infrequent or uncommon items that do not warrant their own separate heading.

EFT

Electronic Funds Transfer.

Statement of Receipts and Payments

A report created from the cash receipts and cash payments journals showing cash inflows, outflows, and the bank balance at the beginning and end of a period.

Cash Surplus

The positive difference when total cash receipts exceed total cash payments during a period.

Cash Deficit

The negative difference when total cash receipts are lower than total cash payments during a period.

Income Statement

A financial report that calculates the profit or loss of a business over a given time period by deducting expenses from revenue.

Profit

What is left over after expenses are deducted from revenues ($\text{Profit} = \text{Revenue} - \text{Expenses}$).

Accounting Equation

The core relationship representing a business's financial position, which must always balance: $\text{Assets} = \text{Liabilities} + \text{Owner's Equity}$.

Balance Sheet

A financial statement that reflects a business's financial position at a given point in time by detailing its assets, liabilities, and owner's equity.