Master the Terminology
Use this A-Z guide to review key terms before your exam. Understanding these definitions is the first step to scoring an A*.
The equivalent of 'Capital' for a non-profit organization. Calculated as Total Assets minus Total Liabilities.
An amount owed by a debtor that is considered irrecoverable and is written off as an expense.
The total resources used by a business. Formula: (Owner’s Equity + Non-Current Liabilities).
An entry that appears on both sides of the accounting system (e.g., setting off a sales ledger balance against a purchase ledger balance).
Resources (cash or goods) taken out of the business by the owner for personal use.
Revenue minus the Cost of Sales. It represents the profit made from core trading activities.
The concept of not overstating assets or profits. Losses are recorded immediately, but profits only when realized.
Goods that are partially finished at the end of an accounting period.