Asset - Anything owned or controlled by a business which is expected to be used in the future, Liability - These are debts or obligations the business owes to others, Capital - This is the amount of money the owner or owners have invested in the business, Intangible assets - These are things the company owns which cannot be touched. Such as patents, copyrights and brand namese , Tangible assets - These are owned by the company and can be seen and touched. Examples include buildings and machinery, Non -Current Liabilities - Debts or obligations that must be paid by the business which will exist for more than ONE year. Examples are 5 year Bank Loan and a mortgage , Current Assets - These are things the company owns that ca be converted into cash quickly, in less than ONE year. Examples are Cash, Accounts Receivable and Inventory, Accounts Receivable - This is when customers who bought a good from the company on credit and the company needs to be paid for these goods. Accounts receivable are a current Asset, Accounts Payable - This is when the company must pay for raw materials they have purchased from supplier on credit. This is a current liability for the business because it is a debt which neds to be paid in less than one year, Current Liability - These are debts the business owes to its suppliers which will have to be paid in less than one year. Example is Accounts or trade payable and an overdraftor , Non-current Assets - These are owned by the business and expected to be used in the business for more than one year. Examples include machinery, buildings and vehicles, Balance Sheet - This is the financial statement which states the businesses Assets, Liabilities and Capital. It is always measured on a particular date and also known as the Statement of Financial Position , Profit and Loss Statement - Also known as the Statement of Comprehensive Income. It measures the income/revenue , the costs/expenses of the business and is used to calculate, Cost of Goods Sold - Refers to the direct costs of producing the goods sold by a company. This amount includes the cost of the materials and labor directly used to create the good. It excludes indirect expenses, such as distribution costs and sales force costs, Overheads/ Expenses - These are the indirect costs, they are not directly related to the production of the good or service, but are day to day expenses of the business such as rent, advertising and utilities, Financial Statements - These are the Balance Sheet (Statement of Financial Position) and the Profit and Loss Statement (Statement of Income), Owners Equity - This represents the owners investment in the business. It can be viewed as the owners claim on the businesses asset once all the liabilities have been paid for, Illiquidity - This refers to a situation where existing assets in the business can not be converted in cash quickly, Gross Profit - This is a company's remaining profit after deducting the costs associated with producing and selling its products or services. It's also known as sales profit or gross income., Net Profit - This is the profit calculated after all expenses are subtracted from the gross profit figure,

Accounting Vocabulary

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