| A | B |
|---|
| sole proprietorship | a business owned by a single individual, operating their business in their own right under their own name or a registered business name |
| partnership | a business owned by two or more persons in business together with a view to make a profit |
| company | a business that exists as a separate legal entity that is entitled to do business in its own right |
| unlimited liability | the legal status of sole proprietorship and partnerships that are not recognised as separate legal entities, so the owner(s) is(are) personally liable for the debts of the business |
| limited liability | the legal status of a company, which exists as a separate legal entity, so the owners have no further responisbility for liabilities incurred by the business |
| internal finance | funds generated by and within the firm |
| capital contribution | an internal source of finance consisting of cash (or other assets) contributed to the business from the personal assets of the owner |
| retained earnings | an internal source of finance consisting of funds generated from business profits that are not taken as drawings by the owner |
| external finance | funds generated from sources outside the business |
| trade credit | a form of external finance offered by some suppliers which allows customers to purchase goods/services and pay at a later date |
| bank overdraft | an external source of finance provided by a bank that allows the account holder to withdraw more than their current account balance |
| term loan | a form of external finance provided by banks and other lenders for a specific purpose and repaid over time |
| lease | a written agreement which grants to the lessee the right to use a particular asset for a specified period of time in return for periodic payments to the lessor |
| accounting | the collection, recording and reporting of financial information to assist business owners in decision-making |
| transaction | an agreement between two parties to exchange goods or services for payment |
| recording | sorting, classifying and summarising the information contained in the the source documents so that it is more usable |
| reporting | the preparation of financial statements that communicate financial information to the owner |
| advice | the provision to the owner of a range of options appropriate to their aims/objectives, and recommendations as to their suitability |
| accounting principles | the generally accepted rules which govern the way accounting information is recorded |
| entity principle | the business is separate from the owner and other entities, and its records should be kept on this basis |
| going concern principle | the life of the business is assumed to be continuous, and its records are kept on that basis |
| reporting period principle | the life of the business must be divided into "periods" of time to allow reports to be prepared, and the accounting records should reflect the reporting period in which a transaction occurs |
| historical cost principle | transactions should be recorded at their original purchase price, as this value is verifiable by source document evidence |
| consistency principle | the business should use the smae accounting methods to allow for the comparison of reports from one period to the next |
| conservatism principle | losses should be recorded when probably, but gains only when certain so that liabilities and expenses are not understated and assets and revenues are not overstated |
| monetary unit principle | all items must be recorded and reported in the currency of the country of location where the reports are being prepared |
| qualitative characteristics | the qualities of the information inaccounting reports |
| relevance | reports should include all information which is useful for decision making |
| reliability | reports should contain information verified by source document evidence so that it is free from bias |
| comparability | reports should be able to be compared over time through the use of consistent accounting principles |
| understandability | reports should be presented in a manner that makes it easy for the user to comprehend their meaning |
| assets | a resource controlled by the entity (as a result of past events), from which future economic benefits are expected |
| liability | a present obligation (as a result of past events), the settlement of which is expected to result in an outflow of economic benefits |
| owners equity | the residual interest in the assets of the entity after the liabilities are deducted, the owners claim on the firms assets |
| balance sheet | an accountin report that details a firm's financial position at a particular point in time by reporting its assets, liabilities and owner's equity |
| classification | grouping together items that have some common characteristic |
| source documents | the pieces of paper that provide bohe the evidence that a transaction has occurred, and the details of the transaction itself |
| GST | Goods and Services Tax: a 10% tax levied by the federal government on sales of goods and services |
| cash receipt | #NAME? |
| cheque butt | a source document used to verify cahs payments |
| invoice | a source document used to verify a credit transaction |
| journal | an accountin record which classifies and summarises transactions during a particular reporting period |
| Statement of Receipts and Payments | an accounting report which lists cash receipts and payments during a reporting period, the change in the bank balance, and the opening and closing bank balance |
| cash receipts journal | an accounting record which summarises all cash received from other entities during a particular reporting period |
| cash payments journal | an accounting record which summarises all cash paid to other entities during a particular reporting period |
| cash surplus | an excess of cash receipts over cash payments, leading to an increse in the bank balance |
| cash deficit | an excess of cash payments over cash receipts, leading to a decrease in the bank balance |
| GST payable | GST owed by the business to the ATO when the amount of GST the business has received on its fees is greater than the GST it has paid to its suppliers |
| GST settlement | a payment made to the ATO by a small business to settle GST payable |
| GST receivable | GST owed to the business by the ATO when the amount of GST the business has paid to its suppliers is greater than the GST it has received on its fees |
| internal control | the procedures and strategies used to protecht the firm's assets from theft, damage and misuse |
| cash control | the procedures and strategies used to protect the firms cash |
| bank statement | a record kept by the bank of all transactions affecting a particular bank account |
| bank reconciliation | the process of verifying that the entries in a firm's cash journals are the same as those recorded by the firm's bank on the Bank Statement |
| direct credit | a deposit of cash directly into a bank account |
| direct debit | a withdrawal of cash directly from a bank account |
| dishonoured cheque | a cheque that cannot be honoured/exchanged for cash because there are insufficient funds in the account of the drawer to allow the payment to be made |
| deposit not yet credited | a cash deposit that is yet to appear on the Bank Statement (usually due to the timing of its preparation) |
| unpresented cheque | a cheque that has not yet been presented for payment by the payee |
| revenue | an inflow of an economic benefit in the form of an increse in assets that increases owner's equity (except for capital contributions) |
| expense | an outflow or consumption of an economic benefit in the form of a decrease in assets that reduces owner's equity (except for drawings) |
| Profit and Loss Statement | an accounting report which details the revenues earned and expenses incurred during the reporting period |
| Tax File Number | a number allocated by the ATO to entities that are required to submit a tax return |
| progressive tax | a form of taxation that charges a higher tax rate as income rises |
| tax free threshold | the level at which income ceases to be tax free |
| tax bracket | an income range within which tax is levied at a certain rate |
| taxable income | the net income on twhich the ATO will determine the firm's tax liability |
| assessable income | any income earned by a business that is deemed to be taxable by the ATO |
| allowable deductions | an expense incurred by a business that can be deducted from assessable income to reduce taxable income |
| Australian Business Number | a number allocated by the ATO to all businesses that wish to be registered for certain forms of taxation |
| tax invoice | a source document issued by a business that is registered for GST |
| Business Activity Statement | a statement used to reort business tax entitlements and opligations, including GST, PAYG and Fringe Benefit Tax |
| PAYG tax | Pay As You Go: a form of taxation which requires employers to withould an amount from the amounts paid to employees equivalent to their expected tax liability for that period |
| Capital Gains Tax | a form of taxation that is charged when a gain is made on the sale of an asset (that has not been depreciated) |
| Recommended Retail Price | a selling price that is recommended by the manufacturer or wholesaler |
| competitor's prices | prices charged by businesses competing in the same market |
| market reation | the response of customers in a particular marketplace to price levels for a particular good or service |
| quote | a method of determining a selling price by estimating the costs involved with a particular job, and then adding on a certain amount to provide profit |
| mark-up | determining selling prices by adding to the cost price a predetermined profit margin |
| break-even analysis | ananalysis tool that llows a business to determine a selling price or volume of sales that will let them achieve a specific profit goal |
| break even point | the level of sales where total revenue equals total expenses and the business makes neither a profit nor a loss |
| variable costs | costs that vary directly with the level of activity |
| fixed costs | costs that do not vary with the level of activity |
| contribution margin | the gross profit from each sale that goes towards covering fixed expenses and contributing to net profit; calculated by deducting variable costs from selling price |
