Accounting terms

• Accounting


  The process of selecting, classifying, summarising and communicating financial data to provide the users of business with useful information so they can make informed decisions
• Accounting Cycle


  A series of steps to use of information for decision making
• Accounts Payable


  A person to whom money is owed for goods and services (formerly known as creditors)
• Accounts Receivables


  A person who owes money to the business for goods or services supplied (formerly known as debtors)
• Bad Debts


  A debt that a business will not be able to collect
• Statement of Financial Position


  A statement showing assets, liabilities and capital (Formerly known as Balance Sheet)
• Budget


  An estimate of income and expenditure for a set period of time
• Capital


  The total resources invested and left in a business by its owner
• Carriage Inwards


  Cost of transportation of goods purchased by a business
• Carriage Outwards


  The cost of transportation of goods to customers
• Cash discounts


  An allowance given for quick payment of an account owing
• Trade Discounts


  A reduction in price given to a trade customer when calculating the price to be charged to that customer for some goods
• Depreciation


  The part of the cost of a fixed asset, consumed during its period of use in the firm
• Discounts Allowed


  A reduction from the amount due given to customers who pay their accounts within the time allowed
• Discount Received


  A deduction from the amount due given to a business by a supplier when their account is paid before the time allowed has elapsed
• Drawings


  Money or goods taken out of the business by the owner for their private use
• Non-current Assets


  Assets which have a long life and which were brought with the intention to use them in the business (formerly known as Fixed Assets)
• Current Assets


  Assets which are used to maintain the day-to-day operations of the business (Inventory, Debtors, Bank and Cash) (Stock/goods)
• Inventory


  Goods in which the business normally deals that are held with the intention of resale (formerly known as stock)
• Non-Current Liabilities


  Liabilities that will be settled in the longer term, which is usually more than one year
• Current Liabilities


  Liabilities that will be settled in the short term, which is usually less than one year
• Returns Inwards


  Goods returned to the business by customers (Also known as sales returns)
• Returns Outwards


  Goods returned to suppliers by the business (Also known as purchases returns)