ASSEB Higher Secondary Accountancy key terms

Amounts received or receivable from members of a not-for-profit organisation as periodic dues. Only the current period's subscription is income; arrears and advances are shown as assets or liabilities.

Subscription belonging to the current or earlier years that members have not yet paid. It is an asset in the Balance Sheet; the current year's portion is credited to income.

A nominal account prepared by a not-for-profit organisation that records revenue receipts and revenue payments on an accrual basis, showing surplus or deficit for the year instead of profit.

A summarised cash book of a not-for-profit organisation, recording all actual cash and bank receipts and payments during the year, whether capital or revenue, opening with the opening balance.

Income earned in the current period but not yet received in cash, such as interest or rent due. It is added to the relevant income and shown as an asset.

The excess of assets over liabilities of a not-for-profit organisation, equivalent to owners' capital. It is increased by surplus and donations and reduced by deficit.

The excess of income over expenditure in the Income and Expenditure Account of a not-for-profit organisation. It is added to the capital fund rather than distributed.

The account recording each partner's original contribution, share of profits or losses, interest on capital, drawings and salary. Under the fixed method it stays unchanged except for permanent items.

An account used under the fixed capital method to record fluctuating items such as share of profit, interest on capital, salary, commission and drawings, without disturbing the capital balance.

An account prepared after the profit and loss account to distribute partnership profit among partners through interest on capital, salary, commission and share of residual profit or loss.

The agreed proportion in which partners share profits and losses of the firm. In the absence of a deed, it is equal, and it determines distribution in appropriation and reconstitution.

A reward credited to partners calculated on their capital balances at an agreed rate. It is allowed only when the deed provides for it or partners agree, and it reduces distributable profit.

An amount charged to partners on amounts withdrawn for personal use, credited to the firm as income and debited to the partner's capital or current account.

Cash or goods withdrawn by a partner for personal use. Drawings reduce the partner's capital or current account and are not an expense of the firm.

An arrangement where a partner is assured a minimum share of profit, any shortfall being borne by the guaranteeing partner or partners in an agreed ratio.

The proportion in which existing partners give up their share of profit in favour of an incoming partner. It equals old ratio minus new ratio and is used to divide goodwill brought in.

The proportion in which continuing partners acquire the share of a retiring or deceased partner. It equals new ratio minus old ratio and governs payment of the retiring partner's goodwill share.

The value of a firm's reputation, customer base and earning capacity beyond normal returns. On admission, retirement or death it is brought in or compensated through partners' capital accounts.

An account prepared at reconstitution to record changes in the values of assets and liabilities. The resulting profit or loss is shared by old partners in the old profit-sharing ratio.

Goodwill inferred from the total capital of the new firm and the new partner's capital contribution when the question gives no explicit goodwill value; the difference is shared by sacrificing partners.

An account opened on dissolution to record the sale of assets, settlement of liabilities and realisation expenses, with the resulting profit or loss shared by all partners in their profit-sharing ratio.

The complete closing of the firm's business, involving sale of assets, payment of liabilities and settlement of partners' accounts, as distinct from mere dissolution of the partnership.

A partner whose personal assets cannot meet the debit balance of capital account on dissolution. The deficiency is borne by solvent partners in their capital ratio, unless the deed says otherwise.

The maximum amount of capital a company may issue, stated in the memorandum of association. It can be increased only by complying with statutory procedures.

The portion of issued capital actually taken up by applicants. It may be called up in instalments, and the unpaid portion appears as calls in arrears or uncalled liability.

Amounts due from shareholders on allotted shares that remain unpaid after the call is made. It is deducted from called-up capital in the Balance Sheet as a contra item.

Cancellation of shares by the company when a shareholder fails to pay calls. Amounts already received are forfeited and transferred to share forfeiture account.

Amount received above the face value of shares or debentures. It is credited to a separate reserve and used only for purposes permitted by law, such as premium on redemption.

A written acknowledgment of debt issued by a company, carrying a fixed rate of interest and usually repayable after a specified period. Debenture holders are creditors, not owners.

A reserve created out of profits to ensure funds are available for redeeming debentures. It is a charge against profit and is invested in specified securities under statutory rules.

Repayment of debenture capital to holders at maturity, by lump sum, instalments, draw of lots or purchase in the open market, financed from profits or fresh issue.

Debentures a company buys back in the open market for cancellation or investment. They are held as an asset until cancelled, when the resulting gain or loss is recorded.

The financial statement of a company showing revenue, other income, expenses, tax and profit or loss for the period, prepared in the prescribed vertical form under the Companies Act.

A statement of a company's assets, liabilities and equity at a given date, presented in prescribed schedules and sub-heads such as non-current assets, current liabilities and share capital.

Profit available to equity shareholders divided by the weighted average number of equity shares. It is disclosed in the statement of profit and loss and is a key market indicator.

Current assets divided by current liabilities. It measures short-term solvency; a ratio near 2:1 is traditionally considered comfortable, though norms vary by industry.

Quick assets, being current assets excluding stock and prepaid expenses, divided by current liabilities. It tests immediate liquidity without relying on inventory sales.

Long-term debt divided by shareholders' funds. It shows financial leverage and the risk borne by owners; a high ratio indicates greater dependence on borrowed funds.

Shareholders' funds divided by total assets. It shows the proportion of total assets financed by owners and is a measure of long-term solvency and capital structure soundness.

Cost of revenue from operations divided by average inventory. It indicates how many times stock is sold and replaced during the year, reflecting efficiency of inventory management.

Revenue from operations divided by average trade receivables. It measures how quickly credit sales are collected and supports assessment of debtors management and working capital efficiency.

The period from purchase of inventory to collection of cash from debtors, computed as days of inventory holding plus days of receivables minus days of payables.

Profit before interest and tax divided by interest charges. It shows how many times earnings cover interest obligations, indicating safety for lenders.

Market price per share divided by earnings per share. It reflects the market's expectation of a company's future earnings and growth relative to current profit.

A statement showing inflows and outflows of cash and cash equivalents during a period, classified into operating, investing and financing activities under the prescribed standard.

The principal revenue-producing activities of an enterprise, including cash from sales, payments to suppliers and employees, and taxes, as reported in the cash flow statement.

Acquisition and disposal of long-term assets and other investments not included in cash equivalents, such as purchase of machinery or sale of investments, shown in the cash flow statement.

Activities that change the size and composition of owners' capital and borrowings, such as issue of shares, proceeds of loans and payment of dividends or interest.

Short-term, highly liquid investments readily convertible into known amounts of cash and subject to insignificant risk of change in value, such as treasury bills and short-term deposits.

A structured record of a student's practical accountancy project containing the title, objectives, methodology, data collected, analysis, findings and conclusion, submitted for assessment.

A project analysing the financial statements of a real or simulated business, typically computing ratios and preparing a cash flow statement, with interpretation and suggestions.

Systematic computation and interpretation of accounting ratios to assess profitability, liquidity, solvency and efficiency, forming the analytical core of a financial statement project.

An oral examination in which the student defends the project file, explaining objectives, sources of data, calculations and conclusions before an examiner.