PSEB SS Accountancy key terms

The ledger account recording each partner's original contribution, share of profits or losses, drawings, interest and salary. It shows the amount finally due to or owed by that partner.

A single capital account for each partner in which all adjustments such as drawings, interest on capital, salary and profit share are recorded, so the balance changes every year.

A method where the original capital stays unchanged in the capital account and all other adjustments are recorded in a separate current account for each partner.

An account opened under the fixed capital method to record drawings, interest on capital, interest on drawings, salary or commission and the share of profit or loss of a partner.

An extension of the profit and loss account of a partnership that shows how profit is distributed among partners through interest on capital, salary, commission, reserves and profit shares.

An amount allowed to partners on their capital balances as a reward for funds invested, charged against profit before the remaining profit is shared in the agreed ratio.

A charge levied on partners for amounts withdrawn for personal use, computed for the period the money was used, and credited to the profit and loss appropriation account.

Money or goods taken by a partner from the firm for personal use. Drawings reduce the partner's capital or current account balance and are not treated as an expense.

Remuneration paid to a partner for services rendered to the firm, allowed only when the partnership deed provides for it, and debited to the appropriation account.

A written agreement among partners setting out capital contributions, profit-sharing ratio, interest terms, salaries, duties and rules for admission, retirement or death of a partner.

The agreed proportion in which partners divide profits and losses of the firm. In the absence of a deed, profits and losses are shared equally among all partners.

The proportion in which existing partners give up their share of profit in favour of an incoming partner, computed as old ratio minus new ratio for each old partner.

The proportion in which continuing partners acquire the retiring or deceased partner's share of profit, computed as new ratio minus old ratio for each continuing partner.

The value of a firm's reputation, customer base and earning capacity beyond the normal return on net assets, paid by an incoming partner or adjusted on retirement or death.

The amount brought in by an admitted partner for the share of goodwill he acquires, credited to the sacrificing partners' capital accounts in their sacrificing ratio.

An account prepared at reconstitution to record changes in the value of assets and liabilities, with the resulting profit or loss shared by old partners in their old ratio.

A revaluation account prepared when the partners decide not to alter the books, so revised values appear only in the balance sheet through a memorandum record.

Undistributed profits and general reserves appearing in the old balance sheet, which on reconstitution are transferred to the old partners' capital accounts in their old profit-sharing ratio.

A single policy taken by a partnership on the lives of all partners, the surrender value of which is an asset shared by the partners at reconstitution or on death.

An account opened in the name of the legal representative of a deceased partner to record the amount due, which may be paid in instalments with interest.

The total amount raised by a company by issuing shares to its members, divided into units of fixed face value and shown under shareholders' funds in the balance sheet.

The maximum amount of share capital that a company is permitted to issue, as stated in its memorandum of association and often called nominal or registered capital.

The part of authorised capital that the company has actually offered to the public for subscription, including shares allotted to vendors and underwriters.

The portion of issued capital for which applications have been received and shares actually allotted, forming the basis on which calls are later made.

The part of the face value of subscribed shares that the company has demanded from shareholders, whether or not the money has been received.

The amount of called-up capital actually received from shareholders, being called-up capital less calls in arrears and less amounts unpaid on forfeited shares.

Money demanded on allotted shares that shareholders have failed to pay by the due date, shown as a deduction from called-up capital in the balance sheet.

Amounts received from shareholders before the corresponding call is made, shown as a current liability and usually carrying interest if the articles permit it.

Cancellation of shares when a shareholder fails to pay calls, whereby amounts already received are retained and the shares may later be reissued at a discount.

The excess of the issue price of shares over their face value, credited to a separate reserve usable only for specified purposes such as issuing bonus shares.

Fully paid shares issued free to existing shareholders in proportion to their holdings, using accumulated reserves and securities premium instead of fresh cash.

A written acknowledgement of debt issued by a company, carrying a fixed rate of interest and repaid after a stated period, secured usually by a charge on assets.

A reserve created out of divisible profits to set aside funds for redeeming debentures, required in prescribed proportions before redemption begins.

The difference between the face value of debentures and the lower amount at which they are issued, written off against profits over the life of the debentures.

An entity formed for charitable, educational, religious or social purposes rather than profit, whose surplus is added to capital and not distributed to members.

A summary of actual cash and bank receipts and payments during a period, including capital items and opening and closing balances, prepared like a cash book.

An accrual-based account of a not-for-profit organisation showing revenue income and expenditure for the period, with the balance being surplus or deficit.

The periodic amount members of a not-for-profit organisation pay, recognised as income for the period to which it relates, with arrears and advance amounts adjusted.

The accumulated surplus of a not-for-profit organisation, being excess of assets over liabilities, shown in place of owners' capital in its balance sheet.

A possible obligation arising from past events whose existence will be confirmed only by uncertain future events, disclosed in notes and not recorded in the balance sheet.