Glossary
Accounting Equation - All accounting entries made in the books of account of a business have a relationship based on the accounting equation: Assets = Liabilities + Owner’s Equity
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Asset - Tangible or intangible items of value owned by a business e.g. cash, stock, buildings & vehicles
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Balance Sheet - Shows a snapshot at a given point in time of the net worth of the business. It details the assets, liabilities and owner’s equity
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Capital -Amount invested in the business (usually at start up, but may include additional funds raised)
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Conversion Period - The period (month) in which the accounts are being converted, or transferred over, from one system to another
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Cost of Sales - Expenses in the financial year which can be directly attributed to sales of those goods or services
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Credit- Revenue in the Profit and Loss or Liability in the Balance sheet
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Debtor- Amount owed to the business from a customer
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Double Entry-System of bookkeeping where all transaction have 2
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Bookkeeping- entries, a debit and a credit, which net to zero.
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Expense - Amount relating to expenditure for the financial year (excluding purchases of assets or cost of sales) regardless of whether cash has been paid or not
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Fixed Asset - Long-term asset (items or amounts to be used or received after 12 months) e.g. building or vehicle
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