Accounting Basics

• capital expenditure are funds used by a company to acquire, upgrade and maintain physical assets such as property plans, buildings, technology and equipment
• capital income are returns earned when an investment is sold for more than its purchase price, such as interest, dividends, and rent
• operating income measures the amount of profit from a business' operations after deducting operating expenses such as wages, depreciation and cost of goods sold
• the assets of the business in the statement of financial position (balance sheet) is a summary of the business assets and liabilities - it shows at any point in time how much money you would have left over if you sold your assets and paid off all debts
• fixed costs are costs that do not change with and increase or decrease in the number of goods and services produced or sold
• liabilities are what a business owes
• non-current liabilities are the financial obligations of a business that are not expected to be settled within a year e.g. long term leases
• taxation accounts are a subsector of accounting that deals with the preparations of tax returns and tax payments
• with taxation accounts the year end finishes with the end of the production cycle
• management accounts are financial reports produced for the business owners and managers generally monthly or quarterly
• management accounts are normally a profit and loss report and a balance sheet and are similar to year end accounts only less formal and are personalised to user requirements
• the statement of comprehensive income provides a holistic view of a company's income and is not fully captured on the income statement. It is also known as the profit loss statement
• the statement of financial performance is an accounting summary that details a businesses revenue, expenses and net income. It is also known as the statement of operating performance
• the statement of financial position represents the assets, liabilities and equity of a business at a point in time and is also known as a balance sheet