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36 terms

Types of accounts

Definitions of accounts commonly used in accounting. Source text Accounting Concepts & Applications Introductory Theory & Practice (Greig, Mackay, Beaumont, Sagner) VCTA 4th ed.
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account
is used to record all changes regarding an item in business, for example; furniture, inventory, and sales
revenue
income earned by a business
sales
revenue earned from the selling of goods in a trading enterprise
sales returns
when a customer returns goods to a trading enterprise or an allowance is given for defective goods
fees revenue
revenue earned from the selling of professional services, for example; accountant fees, solicitor fees, doctor fees
service revenue
revenue earned from selling a service, for example; servicing of a motor vehicle, providing a hair cut and blow dry
commission revenue
revenue earned by promoting another business's product or service, for example; sales commission, spotter's commission
interest revenue
revenue earned due to the time value of money, for example; bank interest for term deposits, interest received on investments
rent revenue
revenue earned from the letting out of premises, for example; the business rents out one of its storage sheds to another business
expenses
the costs incurred in running the business to enable revenue to be earned
cost of goods sold
expenses incurred from purchasing goods to sell to customers and includes delivery charges (freight) and customs duty (taxes)
motor vehicle expenses
expenses incurred in operating a motor vehicle such as fuel, repairs and servicing
rent or lease expense
expenses incurred in renting or leasing business premises in which the operations of the business are carried out
salaries and wages
expenses incurred when engaging employees to work for the business
electricity expense
expense incurred for using electricity in the business's operations
interest expense
expenses incurred due to the time value of money and includes interest paid for overdue accounts, interest paid to the bank for borrowing money through loans
assets
items of value that are owned by the business and used to generate income, for example; motor vehicles, land, stock, and cash
bank
cash held by the business in a bank account, also can be called cash at bank
accounts receivable
other people or organisations that owe money to the business because of sales made on credit, also known as debtors or trade debtors
inventories
also known as stock, goods or merchandise, they are items bought and sold by a trading business as its main source of revenue
furniture
furniture owned by the business, for example; desks, chairs, reception desks, filing cabinets, and bookcases
fittings and fixtures
shelves that have been installed in the premises to assist with the display of goods for sale
motor vehicles
vehicles owned by the business
equipment
computers, machinery, or other items owned by the business that are used by the owner or employees in the business
buildings
premises owned by the business
land
land owned by the business
shares
an investment that the business has in another company
loan to another enterprise
money lent to another enterprise as an investment
goodwill
the value of the reputation of a business, which is only valued when the business is purchased and is considered intangible (you can't touch it, but it exists)
liabilities
amounts that a business owes to other people or organisations usually due to purchasing assets
accounts payable
also known as creditors or trade creditors, they are people or organisations to whom the business owes money as a result of credit purchases
loan
money borrowed from a bank, financial institution or other source
mortgage
a loan taken out by a business, which is secured by assets usually a house and if the loan was not paid the business would have to surrender the house to the loan provider
owner's equity
the total value of the investment made by the owner in the business
capital
the investment an owner has made in a business in cash or other forms including motor vehicles and equipment
drawings
the value of cash or goods the owner has withdrawn from the business