Final Accounts: Key Concepts and Definitions
Final accounts – Key
Words
Debtors – D for deadly
People who owe us money
C
r
e
d
i
t
o
r
s
–
C
f
o
r
C
r
a
p
•
People we owe money
Assets – A for awesome
•
Things of value owned by a business
Liabilities – L for lousy
Things we owe that must be repaid within one year such as bank
overdraft and creditors
Fixed Assets
Long term items of value
owned by the business
e.g. land, buildings, motor vehicles, machinery
Current Assets
•
Items of value
owned by the business that will be
used up within a
year
such as :
•
Stock
•
Debtors
•
Cash
Current Liabilities
•
Things we owe that we
must pay within a year
such as
•
Bank overdraft
•
Creditors
Long term liabilities
•
Things the business owes that will be repaid over a term
longer than
5 years
such as a long term loan also called a debenture
Purchases
•
Goods purchased for resale
e.g. clothes bought to be resold
Sales
•
Revenue received from
sale of goods
that the company
normally
trades in
e.g. clothes shop selling clothes is sales
Clothes shop selling old table used to display clothes is not counted as
sales as it does not normally trade tables
Gains
•
Revenue
received by the business
other than sale of goods normally
traded
e.g. rent receivable, interest receivable
Hint – in your trading profit and loss and appropriation, anything
receivable is a gain
Explore the essential key words related to final accounts such as Debtors, Creditors, Assets, Liabilities, Fixed Assets, Current Assets, Current Liabilities, Long-term Liabilities, Purchases, Sales, and Gains. These images provide a visual representation of the concepts to help you grasp the fundamentals of accounting easily.
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Presentation Transcript
Final accounts Key Words
Debtors D for deadly People who owe us money
Creditors Creditors C for Crap C for Crap People we owe money
Assets A for awesome Things of value owned by a business
Liabilities L for lousy Things we owe that must be repaid within one year such as bank overdraft and creditors
Fixed Assets Long term items of value owned by the business e.g. land, buildings, motor vehicles, machinery
Current Assets Items of value owned by the business that will be used up within a year such as : Stock Debtors Cash
Current Liabilities Things we owe that we must pay within a year such as Bank overdraft Creditors
Long term liabilities Things the business owes that will be repaid over a term longer than 5 years such as a long term loan also called a debenture
Purchases Goods purchased for resale e.g. clothes bought to be resold
Sales Revenue received from sale of goods that the company normally trades in e.g. clothes shop selling clothes is sales Clothes shop selling old table used to display clothes is not counted as sales as it does not normally trade tables
Gains Revenue received by the business other than sale of goods normally traded e.g. rent receivable, interest receivable Hint in your trading profit and loss and appropriation, anything receivable is a gain
