Definitions:

Share Premium: the amount by which the amount

received by a company for a stock issue exceeds its face
value.
Doubtful debts: An amount by which money is owed and
there is a high chance that not all of it will be paid.
Duality concepts:
Sole Trader Accounts: Type of business entity that is
owned and run by one individual and in which there is no
legal distinction between the owner and the business.
The owner receives all profits (subject to taxation specific
to the business) and has unlimited responsibility for all
losses and debts. Every asset of the business is owned by
the proprietor and all debts of the business are the
proprietor's. It is a "sole" proprietorship in contrast
with partnerships. A sole proprietor may use a trade
name or business name other than his or her legal name.
Net Book Value: The net asset value of a company,
calculated by total assets minus intangible assets
(patents, goodwill) and liabilities.
Prudence: Accounting transactions and other events are
sometimes uncertain but in order to be relevant we have
to report them in time. We have to make estimates
requiring judgment to counter the uncertainty. While
making judgment we need to be cautious and prudent.
Prudence is a key accounting principle, which makes sure
that assets and income are not overstated and liabilities
and expenses are not understated. Example of Prudence is
bad debts and doubtful debts.
Provision for Accumulated Depreciation: Most fixed
assets such as plants, equipment and vehicles decline in
value over time as they are used and as they age. The

provision for depreciation accounts for this by lowering

their value each year on financial statements and on tax
returns for a set period of time. The accumulation of this is
known as the provision for accumulated depreciation
Matching Concepts: In order to reach accurate net
income figure, the expenses incurred to earn the revenues
recognized during the accounting period should be
recognized in that time period and not in the next or
previous. This is called matching principle of accounting.
Partnership Accounts: A partnership exists if two or
more people own a business jointly. The Partnership
agreement Sets out terms of the partnership, either
written or oral, if no agreements than terms are laid down
by the partnership Act 1890. There is an Appropriation
Account (profit allocation), Capital Account (records capital
contributions), Current Account (records profit allocated
and drawings taken).
Partnership Act 1890: Profits and losses are to be
shared equally, No interest on capital, no interest on
drawings, No salaries.
Net Current Assets: Current assets minus current
liabilities. This amount indicates how much capital is being
generated or used up by day-to-day activities. If net
current assets are negative, the company may
have difficulty financing its day-to-day operations. also
called working capital or current capital.
Business Entity Concept: In accounting we treat a
business or an organization and its owners as two
separately identifiable parties. This concept is called
business entity concept. It means that personal
transactions of owners are treated separately from those
of the business.
Non- current Assets: Assets that are expected to stay
within the business over a one-year period.

Retained Profits: Profits that have been kept in the

business rather than being distributed to directors and
shareholders.
Manufacturing Accounts: Only applies to a
manufacturing business. Calculates the cost of production.
Features include: Direct and Indirect costs, Inventory.
The Balance sheet equation: The basic accounting
equation, also called the balance sheet equation,
represents the relationship between the assets, liabilities,
and owner's equity of a business. It is the foundation for
the double-entry bookkeeping system. For each
transaction, the total debits equal the total credits. It can
be expressed as

Current Assets: Assets that are within the business and

are expected to be used or sold within a one-year period.
Equity: ownership interest in a business. Examples
include stockholders' equity or owner's equity.
Money Managing Concept: Money Measurement
Concept in accounting, also known as Measurability
Concept, means that only transactions and events that are
capable of being measured in monetary terms are
recognized in the financial statements
Accounts of Non-Profit Organisations: A company that
uses surplus revenues to reach its goals rather than
distribute them as shares or profit.
Limited Liability Company: not a corporation; it is a
legal form of company that provides limited liability to its
owners
Accruals Concept: Business transactions are recorded
when they occur and not when the related payments are

received or made. This concept is called accrual basis of

accounting and it is fundamental to the usefulness of
financial accounting information.
Capital Expenditure: Funds used by a company to
acquire or upgrade physical assets such as property,
industrial buildings or equipment. This type of outlay is
made by companies to maintain or increase the scope of
their operations. These expenditures can include
everything from repairing a roof to building a brand new
factory.