Terms Introduced in the Chapter

A business or economic unit that has a distinct, individual existence and for which a separate set of accounts is maintained, kept …

An event involving a transfer of money or money's worth between two or more parties; it can be a cash transaction or …

Economic resources owned or controlled by the business that can be expressed in money terms and are expected to give future benefit — e.g. cash, …

Obligations or debts the business owes to outsiders and must pay at a future date, such as creditors, bills payable, loans an …

The amount invested in the business by the owner, in cash or in kind; from the business's point of view it is an obligation owed back to the owner, sho …

The total revenue earned from goods sold or services provided to customers, whether for cash (cash sales) or on c …

The amounts a business earns from selling its products or rendering services, together with items such as commission, interest, rent and dividends re …

Costs incurred to earn revenue, measured by the value of assets consumed or services used in a period — e.g. rent, wages, salaries, de …

Spending money or incurring a liability for a benefit, service or property received; it is revenue expenditure (an expense) if its benefit is used up within a year, and capital expenditure (an …

The excess of the revenues of a period over the related expenses; profit increases the …

A profit arising from an event or transaction incidental to the business, such as the sale of a fixed asset above its book value or an increase …

The excess of expenses over related revenues, or money/money's worth lost without any benefit in return, such as goods destroyed by fire or a loss on the sale of a fixed asset; …

A deduction from the price of goods. A trade discount is a reduction from the list price given at the time of sale (not recorded in the books); a cash discount is given for pr …

A documentary proof that supports a transaction — such as a cash memo, invoice or receipt — and forms the basis for recording …

The products a business deals in — bought and sold (or produced and sold) in its normal course of trade. The same item may be goods for one business and an a …

The withdrawal of cash or goods by the owner from the business for personal use; drawings reduce th …

The total amount of goods bought by a business, for cash or on credit, for resale or for use in production; it excludes the pu …

The goods, spares and other items a business has on hand at a point in time (stock in hand). Closing stock is what remains unsold at the period end; opening stock is the stock …

Persons or entities who owe money to the business for goods or services bought on credit; the total is shown as sundry debtors on the assets …

Persons or entities to whom the business owes money for goods or services received on credit; the total is shown as sundry creditors on the liabilities …