This document defines key financial management terminology used in accounting including profit and loss statements, balance sheets, assets, liabilities, equity, income, expenses, debtors, and creditors. A profit and loss statement shows income and spending over a period, while a balance sheet lists the value of all assets and liabilities at a point in time. Assets can be current, non-current, or physical. Liabilities are loans or expenses owed. Owner's equity represents the net worth of the business.
This document defines key financial management terminology used in accounting including profit and loss statements, balance sheets, assets, liabilities, equity, income, expenses, debtors, and creditors. A profit and loss statement shows income and spending over a period, while a balance sheet lists the value of all assets and liabilities at a point in time. Assets can be current, non-current, or physical. Liabilities are loans or expenses owed. Owner's equity represents the net worth of the business.
This document defines key financial management terminology used in accounting including profit and loss statements, balance sheets, assets, liabilities, equity, income, expenses, debtors, and creditors. A profit and loss statement shows income and spending over a period, while a balance sheet lists the value of all assets and liabilities at a point in time. Assets can be current, non-current, or physical. Liabilities are loans or expenses owed. Owner's equity represents the net worth of the business.
expenditure for a specific period of time, e.g. a month, a quarter, a year. Balance Sheet
It is the total picture of a company’s worth at a
given point in time, e.g. June 30. It lists the value of all assets and liabilities. Income Moneys received or expected to be received. (i.e. invoice) Expenditure
Moneys spent or bills received.
Assets
A physical asset is anything that a person or
business owns, e.g. car, furniture, building, equipment. Current Asset Also known as “liquid asset”, are those that a business could expect to realise in cash, sell or consume during the current year, e.g. cash, short-term investments. Non-Current Asset
Also known as “non-liquid asset”, are long-
term assets such as property and equipment. Owner’s Equity
The net worth of the business. All assets less
all liabilities equals net worth. Liabilities
Loans or expenses that a person or company
has committed to and must pay for. Capital
Money and property that a person or company
uses to transact business. Reserves
Funds that have been set aside for special
purposes or to cover contingencies. Debtors
People who owe you money.
Creditors
People you owe money to.
Depreciation An amount which represents a decrease in the value of an item over time due to wear and tear - usually expressed as a percentage amount each year.