Business Terms Flashcards

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Business Transaction

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An event or an exchange between two or more parties that has a monetary impact on the financial position of a business. Eg: Purchasing raw materials on credit, Sales in cash.

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Account

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A systematic record of financial transactions relating to a particular asset, liability, equity, revenue, or expense. Eg: Cash Account, Sales Account.

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Capital

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The money or other assets contributed by the owner(s) to the business for its operations. Eg: Owner investing personal savings into the business, owner bringing a personal vehicle into the business for its use.

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Drawings

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Cash or goods withdrawn by the owner(s) from the business for personal use. Eg: Owner taking cash from the business till to pay for personal groceries, owner taking inventory for personal use.

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Liabilities

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Financial obligations or debts that a business owes to external parties.

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Non-Current Liabilities

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Obligations that are due for payment more than one year from the balance sheet date. Eg: Bank Loan (payable over 5 years), Debentures, Long-term Lease Obligations.

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Current Liabilities

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Obligations that are due for payment within one year from the balance sheet date. Eg: Accounts Payable (Creditors), Short-term Bank Overdraft, Salaries Payable.

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Assets

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Economic resources owned by the business that are expected to provide future economic benefits.

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Non-Current Assets

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Assets held for long-term use and not intended for resale in the ordinary course of business.

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Tangible Fixed Assets

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Physical assets that can be touched and seen. Eg: Land and Building, Plant and Machinery, Furniture and Fixtures.