Junior Assistant (Accounts) flashcards

33 cards. Read the term and the definition here. The deck at the top of this page is optional.

Accounting Equation

Assets equal liabilities plus owner's equity. Every transaction changes at least two elements while keeping the equation in balance, which is the foundation of the double-entry system.

Accrual Concept

Revenue is recorded when earned and expenses when incurred, regardless of when cash is received or paid. It matches costs with the income they helped generate.

Capital vs Revenue Expenditure

Capital expenditure buys or improves a long-term asset and is capitalised. Revenue expenditure covers day-to-day running costs and is charged to the profit and loss account.

Straight-Line Depreciation

Annual depreciation equals cost minus residual value, divided by useful life. The same amount is charged every year, giving an even pattern of expense.

Golden Rules of Debit and Credit

Personal accounts: debit the receiver, credit the giver. Real accounts: debit what comes in, credit what goes out. Nominal accounts: debit expenses, credit incomes.

Suspense Account

A temporary account opened to make a trial balance agree when errors cannot immediately be found. It is closed once the errors are located and rectified.

Bank Reconciliation Statement

A statement reconciling the cash book bank balance with the passbook balance, explaining differences such as unpresented cheques, uncredited deposits, bank charges and direct debits.

Imprest Petty Cash System

A fixed float is given to the petty cashier, who pays small expenses and is reimbursed the exact amount spent, restoring the float to its original level.

Cheque Validity Period

In India a cheque is valid for three months from its date of issue. A cheque presented after that period is treated as stale and returned unpaid.

Crossed Cheque

Two parallel lines on the face of a cheque mean it must be deposited into a bank account and cannot be paid over the counter in cash.

Bank Overdraft

A facility allowing a current account to show a debit balance up to an agreed limit. It is a current liability and is shown as a credit balance in the cash book.

Dishonoured Cheque Entry

When a customer's cheque is returned unpaid, reverse the original receipt: debit the customer's account and credit the bank account, restoring the earlier position.

TDS

Tax Deducted at Source. The payer deducts income tax at prescribed rates on specified payments such as salary, rent and interest, and deposits it with the government.

Input Tax Credit

Credit available to a GST-registered buyer for tax paid on purchases, usable against output tax. It requires a valid invoice and compliance by the supplier.

IGST vs CGST-SGST

Inter-state supplies attract IGST, collected by the Centre and shared with the destination state. Intra-state supplies attract CGST and SGST in equal proportions.

Advance Tax

Tax paid in instalments during the year when estimated liability exceeds the prescribed threshold. Shortfall attracts interest under sections 234B and 234C.

Audit Risk Model

Audit risk equals inherent risk times control risk times detection risk. The auditor assesses inherent and control risk and reduces detection risk through substantive procedures.

Segregation of Duties

No single person should authorise, record and custody the same transaction. Splitting these functions is a core preventive internal control against fraud and error.

Qualified Audit Opinion

Issued when the auditor disagrees with, or cannot obtain evidence about, a material but not pervasive matter. It states the exception clearly in the report.

Break-Even Point

The sales level at which total contribution equals fixed cost and profit is zero. In units it equals fixed cost divided by contribution per unit.

P/V Ratio

Profit-volume ratio equals contribution divided by sales, expressed as a percentage. It shows how much each rupee of sales contributes to covering fixed costs.

Margin of Safety

Actual or budgeted sales minus break-even sales. It measures how far sales can fall before the business starts making a loss.

Sunk Cost

A cost already incurred that cannot be recovered by any future decision. It is excluded from relevant costing because it does not differ between alternatives.

Compound Interest Formula

Amount equals principal multiplied by one plus the rate per period raised to the number of periods. Interest is the amount minus the original principal.

Median and Mode

The median is the middle value of data arranged in order; the mode is the value occurring most frequently. Both are measures of central tendency.

Standard Deviation

The square root of the variance. It measures the average spread of values around the mean, in the same units as the original data.

Successive Discounts

Discounts applied one after another are multiplied, not added. A 10% then 20% discount equals 28% overall, not 30%.

Absolute Cell Reference

A spreadsheet reference such as $A$1 that stays fixed when the formula is copied to other cells, unlike a relative reference which adjusts.

Accounting Software Audit Trail

A chronological record of every entry, edit and deletion in the system. It supports verification, accountability and compliance with statutory record-keeping requirements.

Ledger and Group in Tally

A ledger holds individual account balances and is classified under a group. The group determines how the ledger appears in the balance sheet and profit and loss account.

Active vs Passive Voice

In active voice the subject performs the action; in passive voice the object becomes the subject and the verb uses a form of be with the past participle.

Repo Rate

The rate at which the Reserve Bank of India lends short-term funds to commercial banks against securities. Raising it generally tightens liquidity and curbs inflation.

Fiscal Deficit

Total government expenditure minus total receipts excluding borrowings. It shows how much the government must borrow to meet its spending in a financial year.