Odisha CHSE +2 Vocational Accounting and Auditing key terms

A long-accepted custom or tradition, such as consistency or full disclosure, that guides how accountants record and present information where no strict rule applies.

The principle that every transaction has two equal effects, so total debits always equal total credits and assets always equal liabilities plus capital.

The assumption that a business will continue operating for the foreseeable future, so assets are valued on a continuing basis rather than at forced-sale prices.

Income and expenses are recorded in the period they are earned or incurred, regardless of when cash is actually received or paid.

The relationship Assets = Liabilities + Capital, which must hold after every transaction and forms the basis of the double-entry system.

A record showing the date, accounts debited and credited, amounts, and a brief narration for a single transaction in the book of original entry.

A journal entry that debits or credits more than one account at a time, used when a single transaction affects three or more accounts.

A book containing separate accounts for each person, asset, liability, income, and expense, where journal entries are posted and balances are computed.

A statement listing all ledger balances on a given date to test whether total debits equal total credits before final accounts are prepared.

A temporary account opened to hold the difference in a trial balance so that books may be closed while the error is traced and corrected.

A bookkeeping mistake where a transaction is recorded in the wrong class of account, such as treating a capital purchase as a revenue expense.

A statement prepared to explain the difference between the cash book bank balance and the bank statement balance on a particular date.

A cheque returned unpaid by the bank, for example due to insufficient funds or a signature mismatch, requiring reversal of the earlier entry.

An entry that affects both the cash account and the bank account in a cash book, marked with 'C' and posted to both sides of the ledger.

A written order a customer gives the bank to pay a fixed amount at regular intervals, such as an insurance premium, without issuing a fresh cheque.

A statement prepared to find the cost of goods produced, adjusting raw material consumed for opening and closing work in progress and adding direct expenses.

The account that compares net sales with cost of goods sold to reveal gross profit or gross loss for the period.

An account that records indirect incomes and indirect expenses to convert gross profit into net profit or net loss for the period.

A statement of assets, liabilities, and capital on a specified date, showing the financial position rather than the results of operations.

An expense relating to the current period that remains unpaid at the year end; it is charged to the profit and loss account and shown as a liability.

An amount paid in the current period for a benefit that will be consumed in a later period; it is deducted from the expense and shown as an asset.

The value of unsold goods held on the closing date, credited to the trading account and shown as a current asset in the balance sheet.

A systematic allocation of the depreciable cost of a fixed asset over its useful life, reflecting wear, tear, and obsolescence.

A depreciation method that charges an equal amount each year, calculated as cost less scrap value divided by the estimated useful life in years.

A depreciation method that applies a fixed percentage to the reducing book value of the asset, giving higher charges in early years.

An amount set aside out of profit for a known liability or expected loss whose exact amount cannot be determined with certainty.

An appropriation of profit retained in the business to strengthen the financial position, not intended to meet any specific known liability.

A written instrument in which the drawer orders the drawee to pay a specified sum to a named person on demand or at a fixed future date.

A written promise by the maker to pay a definite sum to a specified person or bearer on demand or at a fixed future date.

Fees paid to a notary public to record the dishonour of a bill, recoverable from the acceptor along with the bill amount.

The value of a firm's reputation, customer base, and earning capacity beyond the normal return on its net assets, brought in or adjusted on admission and retirement.

The proportion in which existing partners give up their share of profit in favour of an incoming partner, used to divide the premium for goodwill.

The proportion in which continuing partners acquire the share of a retiring or deceased partner, used to adjust goodwill among them.

An account prepared at admission, retirement, or death to record increases and decreases in asset and liability values, with the profit or loss shared by old partners.

An account opened on dissolution to record the sale of assets, payment of liabilities, and realisation expenses, revealing the profit or loss on dissolution.

The termination of a partnership by change in relations among partners or by complete winding up of the firm and settlement of accounts.

The amount of share capital called by a company but not paid by shareholders on the due date, shown as a deduction from called-up capital.

Money received from shareholders before the corresponding call is made, a liability of the company until the call falls due.

Cancellation of shares when a shareholder fails to pay calls, with the amount already received transferred to a forfeiture account pending reissue.

The amount received above the face value of shares or debentures, credited to a separate account and usable only for purposes permitted by law.

A written acknowledgement of debt issued by a company, carrying a fixed rate of interest and usually repayable after a stated period.

The portion of distributable profit declared by a company and paid to shareholders in proportion to the paid-up value of their shares.

An arrangement of duties within an organisation so that no single person handles a transaction from start to finish, allowing errors and fraud to be detected quickly.

The overall system of policies and procedures, including internal check, adopted by management to safeguard assets and ensure reliable accounting records.

A written plan listing the audit work to be done, the procedures to be applied, and the timing and staff responsible for each step.

The auditor's examination of supporting documents to confirm that a recorded transaction is genuine, properly authorised, and correctly entered in the books.

The process of confirming, by inspection, physical count, or documentary evidence, that an asset actually exists and is owned by the entity on the balance sheet date.

Determining the money value at which an asset is carried in the books, applying principles such as cost less depreciation or net realisable value.

The information gathered through inspection, observation, enquiry, and confirmation that supports the auditor's opinion on the financial statements.

The formal written opinion issued by an auditor stating whether the financial statements give a true and fair view in accordance with the applicable framework.

An auditor's conclusion that, except for the effect of a specific matter described in the report, the financial statements give a true and fair view.

A possible obligation arising from past events whose existence will be confirmed only by uncertain future events, disclosed in notes rather than recorded.