Accounting(vocab)

• Terminology:

  Sole proprietor- A business owned by one person, who supplied/contributed the capital and carries the risk of profits/loss for the business.
• General ledger- accounts containing a summery of the information in the journals.
• Balance sheet- a statement of the financial position of a business at year end.
• Income statement- a statement that indicates the profit/loss of the year.
• Source document- used by accountant to record transactions.
• Transaction- an agreement, with monetary value, between two parties, where one party gives something to the other in exchange for something else.
• Transferring- the process of transferring/recording information from the journals to the general ledger.
• Journal- A book of first entry used to record transactions.
• CPJ- The Cash Payments journal is the subsidiary ledger used to record all payments made by the business.
• CRJ- the Cash Receipts journal, is the subsidiary ledger used to record all recites received by the business.
• Trial Balance- a summary of accounts in the General Ledger with their business.
• Asset- An item with monetary value, owned by the business and is used to generate profit.
• Current Asset- it is cash and cash equivalent that can be converted into cash within 12 months.
• Trading stock- The goods or merchandise kept on the premises of a shop or warehouse and available for sale or distribution.
• Debtor- customer that owes the business money. They bought on credit.
• Bank- Refers to the current account at a financial institution.
• Petty Cash- A small amount of cash on hand that is used when small amounts are due.
• Cash Float- the money a business keeps in the till as change.
• Non-current assets- an item with monetary value, owned by the business and is used for a period of longer than 12 months to generate profit.
• Land and Buildings- A long-term asset account which shows the purchasing price or cost of land and buildings.
• Vehicles- Cars, trucks, delivery vans, tractors, etc.
• Equipment- Devices, Machines, tools, furniture, etc.
• Liabilities- Debts of a business, an obligation that the business has.
• Current Liability- Debt of a business, for a period less than 12 months.
• Creditors- Business bought goods on credit from creditors, or suppliers, or manufactures, an individual or business to whom the business owes money.
• Bank overdraft- a loan arrangement under which a bank extends credit up to a maximum amount. Also called an overdraft limit.
• Non-current liabilities- Debt of the business, for a period of more than 12 months.
• Mortgage loan- A long-term loan to buy a property.
• Equity- the investment of the owner in the business. Also known as owners equity.
• Capital- Cash and assets contributed by the owner of the business.
• Drawings-cash or assets that the owner takes from the business for his personal use.
• income- a transaction that increases equity. money earned by the business
• Sales- money received from selling goods.
• current income- the money received from delivering/ rendering a service.
• commission income- money received from selling products on behalf of somebody else.
• Sundry expenses - miscellaneous small or infrequent costs that are not assigned to individual ledger accounts but are classified as a group.
• EFT- Electronic Funds Transfer. payment made via the internet,
• loss- Expenses are more than income.
• Profit- income is more than expenses.