BSEH SS Accountancy flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Partnership
- An association of two or more persons who agree to share the profits of a business carried on by all or any of them acting for all, governed by a partnership deed.
- Profit-sharing ratio
- The agreed proportion in which partners share profits and losses; in the absence of a deed, profits and losses are shared equally among partners.
- Interest on capital
- A reward to partners for capital contributed, allowed only if the deed provides and only out of profits; charged to the Profit and Loss Appropriation Account.
- Sacrifice ratio
- The proportion of profit surrendered by existing partners in favour of an incoming partner; computed as old share minus new share.
- Gaining ratio
- The proportion of profit gained by continuing partners from a retiring or deceased partner; computed as new share minus old share.
- Revaluation Account
- A nominal account prepared at reconstitution to record increases and decreases in the values of assets and liabilities; its balance is shared by old partners.
- Realisation Account
- A nominal account opened on dissolution to record the sale of assets and payment of liabilities; its balance is transferred to partners' capital accounts.
- Garner vs Murray rule
- A rule stating that a solvent partner's capital deficiency is borne by other solvent partners in the ratio of their capitals, not in the profit-sharing ratio.
- Calls-in-Arrears
- The amount of called-up capital not received from shareholders; it is deducted from called-up capital in the balance sheet.
- Securities Premium
- The excess amount received over the face value of shares; it is a capital reserve usable only for specified purposes such as bonus shares or buyback.
- Share Forfeiture Account
- An account credited with the amount already received on forfeited shares; the balance after reissue is transferred to Capital Reserve.
- Debenture Redemption Reserve
- A reserve created out of profits to provide for redemption of debentures; it is transferred to General Reserve after redemption.
- Collateral security debentures
- Debentures issued as security for a loan; they are not recorded in the books until the loan is defaulted, when they are recorded at face value.
- Schedule III
- The format prescribed by the Companies Act 2013 for presenting the balance sheet and statement of profit and loss of a company.
- Contingent liability
- A possible obligation arising from past events whose existence will be confirmed by future events; disclosed in notes and not recognised in the balance sheet.
- Current Ratio
- Current Assets divided by Current Liabilities; it measures the firm's ability to meet short-term obligations, with an ideal of 2:1.
- Quick Ratio
- Current assets excluding inventory and prepaid expenses divided by current liabilities; it measures immediate liquidity, with an ideal of 1:1.
- Debt-Equity Ratio
- Long-term debt divided by shareholders' funds; it indicates the proportion of funds financed by outsiders and the associated financial risk.
- Inventory Turnover Ratio
- Cost of revenue from operations divided by average inventory; it shows how many times inventory is converted into sales during a period.
- Return on Investment
- Net profit before interest and tax divided by capital employed, expressed as a percentage; it measures the overall profitability of funds employed.
- Operating activities
- Cash flows from the principal revenue-producing activities of the firm, including cash from sales and payments to suppliers and employees.
- Investing activities
- Cash flows from acquisition and disposal of long-term assets and investments, such as purchase or sale of fixed assets and investments.
- Financing activities
- Cash flows from changes in the size and composition of owners' capital and borrowings, such as issue of shares and payment of dividends.
- Cash equivalents
- Short-term, highly liquid investments with original maturity of three months or less that are readily convertible into known amounts of cash.
- Project file
- A written record of the project work including objectives, methodology, data, analysis, findings, and conclusion, submitted for internal assessment.
- Viva voce
- An oral examination in which the student explains the project, the tools used, and the conclusions drawn to the examiner.
- Internal assessment
- Evaluation of project work and viva conducted by the school, carrying 20 marks in the Accountancy examination.
- Goodwill
- The value of a firm's reputation and customer connections; it is adjusted among partners at admission, retirement, or death in the sacrifice or gaining ratio.
- Current Account
- An account maintained under the fixed capital method to record salary, interest on capital, share of profit, drawings, and interest on drawings of a partner.
- Calls-in-Advance
- The amount received from shareholders before it is called; it is added to paid-up capital and carries interest at 12% p.a. unless the articles provide otherwise.
- Discount on issue of debentures
- The excess of face value over issue price of debentures; it is a loss written off against securities premium or statement of profit and loss.
- Deferred tax
- The tax effect of timing differences between accounting income and taxable income, recognised as a deferred tax asset or liability in the balance sheet.