Accounting

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Sole Trader
Owned or controlled by one person
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Partnership
Owned or controlled by two or more individuals.
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Private limited company (LTD)
A small to medium sized business that is usually run by the family or small group of people who own it and wants the same thing.
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Public limited company (PLC)
A business with limited liability that sells shares with a share capital over £50,000.
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Unlimited Liability
The owner is personally responsible for the for the debt of the company so their personal assets are at risks.
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Limited Liability
The owner is not personally responsible for the debts of the business only the amount of money they invested into the business.
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Going Concern concept
When the business is assumed it will continue into the forseeable future and a consequence of this concept is that the assets will be valued at the cost the business payed for them not its actual Re-Sale Value.
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Accruals
Amounts owed by a business for services or goods during the business normal accounting period
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Consistency
Using the same financial method Year on Year (YOY). In which methods of transacting and accounting are kept consistent and accuracy is improved.
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Prudence
Better to understate than overstate Stock Valuation and Profits. (Being Cautious)
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Materiality
If something is included/excluded in the financial statement of the business and will confuse or mislead the reader than this is called a Material.
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Realisation
Only once The business has the money in hand or the sale has been made and payed for that it is considered as sales revenue and able to be added into the final accounts and financial bookings of the business as only then the business has the money.
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Cost
The normal Day to Day expenses of running a business
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Business Entity
No personal financial transactions are added to the businesses accounts as only information to do with the Business is added to the businesses accounts.
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Objectivity
Avoiding biased when making assets valuation
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Capital expenditure
Money spent on Fixed assets intended to benefit the future financial periods of the business.
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Revenue expenditure
Money spent on the running day to day costs of a business ment to benefit only the Current financial period
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Depreciation
The reduction in value of a fixed asset during its useful life.
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Profit
Total Revenue/Total Costs
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Loss
Total Revenue/Total Costs = (Minus end result represented as brackets)
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Gross profit
Turnover (Revenue) - Cost of goods sold
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Cost of goods sold
(Opening Stock + Purchases) - Closing Stock Sometimes it is (Opening Stock+Purchases+Carriage inwards) - Closing stock
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Net Profit
Gross Profit - Expenses
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Return Inwards
Goods Brought back to the business (also known as Sale returns)
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Return Outwards
Goods that we give back to the seller (also known as Purchase returns)
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Carriage Inwards
Cost incurred when a supplier charges for delivery on the goods purchased ( Buyer has to pay for the delivery of item bought)
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Carriage Outwards
An expense which the business incurs when it pays for the delivery of goods to the customer (Business has to pay for the delivery to the customer so they spend money themselves)
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Depreciation (Straight Line Method)
Cost - Residual Value/Useful life years
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Depreciation (Reducig balance)
Calculates the annual depreciation charge on the carrying amount of the asset at the previous balance sheet date.
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Purchases
Goods bought for Resale
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Sales
Goods that are sold
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Residual Value
Value of the asset NOW! Shown as Net book value on balance sheet
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Other cards in this set

Card 2

Front

Owned or controlled by two or more individuals.

Back

Partnership

Card 3

Front

A small to medium sized business that is usually run by the family or small group of people who own it and wants the same thing.

Back

Preview of the back of card 3

Card 4

Front

A business with limited liability that sells shares with a share capital over £50,000.

Back

Preview of the back of card 4

Card 5

Front

The owner is personally responsible for the for the debt of the company so their personal assets are at risks.

Back

Preview of the back of card 5
View more cards

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