Cambridge IGCSE and O Level Accounting

Flashcards of key vocabulary and concepts for quick review.

Book-keeping

The detailed recording of all the financial transactions of a business.

Accounting

Using book-keeping records to prepare financial statements and to assist in decision-making.

Statement of Financial Position

Shows the assets and liabilities of a business on a certain date.

Inventory

The goods a business has available for resale.

Trade payables

The amount the business owes to the credit suppliers of goods (the trade creditors).

Trade receivables

The amount owed to the business by its credit customers (the trade debtors).

Double entry book-keeping

The process of making a debit entry and a credit entry for each transaction.

Debit side of ledger account

Side which is receiving or gaining value.

Credit side of ledger account

Side which is giving value.

Drawings

Any value taken from the business by the owner of that business.

A balance on a ledger account

The difference between the debit side and the credit side.

Carriage

The cost of transporting goods.

Carriage inwards

The cost of bringing the goods to the business.

Carriage outwards

The cost of delivering the goods to the customer.

Contra entry

A entry which appears on both sides of the cash book.

Bank overdraft

Occurs when more has been paid out of the bank than was put into the bank account.

Cash discount

An allowance given to a customer when an account is settled within a time limit set by the supplier.

Dishonoured cheque

A cheque received which the debtor's bank refuses to pay.

Petty cash book

Used to record low-value cash payments.

The imprest system of petty cash

Where the amount spent each period is restored so that the petty cashier starts each period with the same amount.

Analysis columns

Used to divide the payments into different categories.

Trial balance

A list of balances on the accounts in the ledger at a certain date.

Sales ledger

The ledger in which the accounts of credit customers are maintained.

Purchases ledger

The ledger in which the accounts of credit suppliers are maintained.

Nominal (general) ledger

The ledger where all the other accounts are maintained.

Invoice

A document issued by the supplier of goods on credit showing details, quantities and prices of goods supplied.

Trade discount

A reduction in the price of goods: the rate often increases according to quantity purchased.

Debit note

A document issued by a purchaser of goods on credit to request a reduction in the invoice received.

Credit note

A document issued by a seller of goods on credit to notify of a reduction in an invoice previously issued.

Statement of Account

A document issued by the seller of goods on credit to summarise the transactions for the month.

Cheque

A written order to a bank to pay a stated sum of money to the person or business named on the order.

Receipt

A written acknowledgement of money received and acts as proof of payment.

Book of prime entry

One in which transactions are recorded before being entered in the ledger.

Sales journal

Shows a list of the names of businesses to which credit sales have been made, the value of the goods sold and the date on which the sales were made.

Sales returns journal

Shows a list of the names of businesses which have returned goods previously sold on credit, the value of the goods returned and the date on which the returns were made.

Purchases journal

Shows a list of the names of businesses from which credit purchases have been made, the value of the goods purchased and the date on which the purchases were made.

Purchases returns journal

Shows a list of the names of businesses to which goods, previously purchased on credit, have been returned, the value of the goods returned and the date on which the returns were made.

The sales journal

A list of the names of businesses to which credit sales were made, the value of the sales and the dates on which the sales were made.

The cash book

A two-column cash book.

Standing order

Cheque.

Petty cash book

To record low value (petty) cash payments, serves two purposes: a, it lists the transactions for transferring to ledger accounts; b, it acts as a ledger account for petty cash transactions.

Nominal ledger

The ledger that will always be dived into specialist areas, with accounts for all types of business.

Running balance accounts

A detailed, easy-to-access form of accounting.

The trading section

The process of buying and selling to calculate the profit eared on the goods sold. This is called…

Materiality

The amount of detail required to make decisions on financial profit or loss and/ or asset control.

Duality

Each transaction has two aspects - a giving and a receiving.

Sale ledger

Accounts of customer

Purchase ledger

Accounts of suppliers.

Cheque

It's an order to bank.

This part it's different about of discount

There is no credit on the cash sales.