| The Accounting Entity | This is the idea that the business is a separate entity from its owner (and all other entities). |
| Monetary Measurement | This is the idea that all transactions, assets, liabilities, expenses, income and equity are recorded in dollar terms (using the same currency). |
| Going Concern | This is the idea that the business will continue its present operations into the foreseeable future (the business has no plans to close down). |
| Historical Cost | This is the idea that we record the value of assets at their purchase (or original cost). |
| Period Reporting | This is the idea that the economic activity of a business (that is a going concern) is divided into separate equal periods of time (month, six months, one year). |
| Accrual Basis | This is the idea that the effects of transactions and other events are reported in the period in which they occurred. |
| Assets | Resources presently controlled by the business as a result of a past transaction from which future economic benefits are expected to flow into the business. |
| Current Assets | Assets that are either cash or likely to be turned into cash in the next 12 months. |
| Non-current Assets | Assets that are NOT expected to be converted into cash in the next 12 months. |
| Investment Assets | Money which has been invested long-term which will provide future income |
| Intangible Assets | Non-physical assets that will provide a future economic benefit for the business |
| Property, Plant & Equipment | Assets with long term use which will provide future economic benefit for more than one year |
| Liabilities | Present obligations of the business as a result of a past transaction which are expected to result in an outflow of future economic benefits from the business. |
| Current Liabilities | Amounts that have to be repaid in the next 12 months |
| Non-Current Liabilities | Amounts that do not have to be repaid (in full) in the next 12 months |
| Equity | The amount owed by the business to the owner |
| Revenues | Increases in economic benefits which either increase assets or decreases liabilities that result in an increase in equity other than the owner’s contributions |
| Expenses | Decreases in economic benefits which either decrease assets or increases liabilities that result in a decrease in equity other than the owner’s drawings |
| Revenue Expenditure | Spending by the business on its day-to-day operations to keep it and its assets going. |
| Capital Expenditure | Spending by the business to buy an asset and to get the asset into the business ready to use. |
| Distribution Costs | Those expenses that are paid while selling the good or service or getting it to customers. |
| Administration Expenses | Those expenses that are paid while organising the business operations. |
| Financial Costs | Those expenses that are paid while getting money into the business (loans). |