Accounting Terms and Concepts

This set of flashcards covers essential vocabulary and concepts related to accounting, including different accounting methods, key financial statements, and important accounting principles.

Cash accounting

A method where transactions are recorded on the day of payment.

Accrual accounting

A principle where transactions are recorded when the contract is signed.

Accounts payable

Liabilities that are owed to creditors.

Accounts receivable

Assets that are owed to the business by debtors.

Creditors

Entities to whom money is owed.

Debtors

Entities that owe money to the business.

Financial accounting

Mandatory accounting that focuses on external historical financial information.

Managerial accounting

Optional accounting used for internal decision-making focusing on future projections.

Chartered accountant

A certified accountant who is recognized by a professional body.

Forensic accountant

An accountant who specializes in financial crimes such as fraud and money laundering.

Fraud

Deliberate deception for financial gain.

Auditing

The process of verifying if financial statements present a true and fair view.

Cost accounting

The analysis of the costs of producing a product.

Tax accounting

The accounting method that focuses on taxes and tax obligations.

Balance sheet

A statement that shows the financial position of a company.

Profit and loss account

A financial statement showing the income and expenditures over a period.

Cash flow statement

A financial statement that shows the inflow and outflow of cash.

CFO

Chief Financial Officer, responsible for managing the financial actions of a company.

Depreciation

The reduction in value of an asset over time.

Double-entry bookkeeping

An accounting method where every transaction affects at least two accounts.

Trial balance

A statement of all debits and credits in a double-entry account book.

Intangible assets

Non-physical assets that have value, such as patents or trademarks.

Book value

The value of an asset as it appears on the balance sheet.

Opportunity cost

The loss of potential gain from other alternatives when one alternative is chosen.

Break even

The point where total revenues equal total costs.

AGM

Annual General Meeting, a yearly gathering of a company's interested shareholders.