ACCOUNTING FINAL EXAM :
Key Terms:
1) Book-keeping is the detailed recording of all the financial
transactions of a business.
2) Accounting is using book-keeping records to prepare financial
statements and to assist in decision-making.
3) A statement of financial position shows the assets and liabilities
of a business on a certain date.
4) Capital is the resources provided by the owner to the business.
5) Assets represent anything that a business owns.
6) Liabilities represent anything a business owes to someone or to a
business.
7) Inventory is the goods a business has available for resale.
8) Trade payables represent the amount the business owes to its
credit suppliers.
9) Trade receivables represent the amount owed to the business by
its credit customers.
10) Double entry book-keeping is the process of making a debit
entry and a credit entry for each transaction.
11) Drawings represent any value taken from the business by the
owner.
12) A balance on a ledger account is the difference between the
debit side and the credit side.
13) Carriage is the cost of transporting goods.
14) Carriage inwards is the cost of bringing the goods to the
business.
15) Carriage outwards is the cost of delivering the goods to the
customer.
16) A trial balance is a list of balances in the ledger at a certain
date.
17) A sales ledger is the ledger in which the accounts of credit
customers are maintained
18) A purchase ledger is the ledger in which the accounts of credit
suppliers are maintained.
19) A nominal (general) ledger is the ledger where all the other
accounts are maintained.
20) A contra entry is one which appears on both sides of the cash
book.
21) A bank overdraft occurs when more has been paid out of the
bank than was put into the bank account.
22) Cash discount is an allowance given to a customer when an
account is settled within a time limit.
23) A dishonored cheque is a cheque received which the debtor's
bank refuses to pay.
24) A petty cash book is used to record low-value cash payments.
25) The imprest system of petty cash is where the amount spent
each period is restored.
26) Analysis columns are used to divide the payments into
categories.
27) An invoice is a document issued by the credit supplier showing
details, quantities and prices of goods supplied.
28) Trade discount is a reduction in the price of goods.
29) A debit note is a document issued by a credit customer to
request a reduction.
30) A credit note is a document issued by a credit supplier to notify
of a reduction.
31) A statement of account is a document issued by the credit
supplier to summarize the transaction for the month.
32) A cheque is a written order to a bank to pay a stated sum of
money to the person or business named on the order.
33) A receipt is a written acknowledgement of money received and
acts as proof of payment.
34) A book of prime entry is one which transactions are recorded
before being entered in the ledger.
35) The sales journal shows a list of the names of businesses to
which credit sales have been made.
36) The sales return journal shows a list of the businesses which
have returned goods previously sold on credit.
37) The purchase journal shows a list of the businesses from which
credit purchases have been made.
38) The purchase return journal show a list of the businesses to
which the goods purchased on credit are returned.
39) An income statement is a statement prepared for a trading
period to show the gross profit and profit for the year.
40) The gross profit is the difference between the selling price and
the cost of these goods.
41) The profit for the year is the final profit after any other income
has been added to the gross profit and the expenses are deducted.
42) A service business is one which provides a service .
43) A trading business is one which buys and sells goods.
44) Non-Current assets are assets which are obtained for use and
not for resale
45) Goodwill is the amount by which the value of the business
exceeds the value of the separate assets and liabilities.
46) Current assets are short term assets.
47) Non-Current liabilities are amounts owed which are not due for
repayment within the next 12 months.
48) Current liabilities are amounts owed which are due for
repayment within the next 12 months.
49) The Business Entity Principle means that the business is treated
as being completely separate from the owner of the business.
50) The Consistency Principle means that accounting methods must
be used consistently from one accounting period to the next.
51) The Principle Of Duality means that every transaction is
recorded twice.
52) The Going Concern Principle means that the accounting records
are maintained on the basis that the business will continue for an
indefinite period of time.
53) The Historic Cost Principle means that all assets and expenses
are recorded at their cost.
54) The Matching Principle means that the revenue of the
accounting period is matched against the costs of the same period.
55) The Materiality Principle means that individual items which will
not affect the profit or assets of a business don't need to be
recorded separately.
56) The Money Measurement Principle means that only information
which can be expressed in terms of money can be recorded in the
accounting records.
57) The Prudence Principle means that profits and assets should not
be overstated and losses and liabilities should not be understated.
58) The Realization Principle means that revenue is only regarded
as being earned when the legal title to goods passes from the seller
to the buyer.
59) Capital Expenditure is money spent on purchasing, improving,
or extending non-current assets.
60) Revenue Expenditure is money spent on a running business on a
day-to-day basis.
61) A Capital Receipt is money received by a business from a source
other than the normal trading activities.
62) A Revenue Receipt is money received by a business from
normal trading activities.
