RBSE 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.
- Sacrifice Ratio
- Old share minus new share of the continuing partners; it is the ratio in which the incoming partner's share of goodwill is credited to the old partners.
- Gaining Ratio
- New share minus old share of the remaining partners; used on retirement or death to compensate the retiring partner for his share of goodwill.
- Garner v Murray Rule
- On insolvency of a partner, the deficiency is borne by solvent partners in the ratio of their capitals before dissolution, not in the profit-sharing ratio.
- Realisation Account
- Nominal account opened on dissolution to record realisation of assets and payment of liabilities; its balance is transferred to partners' capital accounts in the profit-sharing ratio.
- Calls in Advance
- Money received from shareholders before the call is due; shown as a current liability and interest is paid at the articles rate or 12% p.a. if silent.
- Share Forfeiture Account
- Account credited with amounts already received on forfeited shares; the portion relating to reissued shares is transferred to Capital Reserve.
- Pro-rata Allotment
- Allotment of shares in proportion to applications received when the issue is oversubscribed; excess application money is adjusted against allotment or calls.
- Securities Premium
- Amount received above face value on issue of shares; credited to Securities Premium Reserve and usable only for purposes listed in Section 52 of the Companies Act 2013.
- Debenture Redemption Reserve
- Reserve created out of divisible profits before redemption of debentures; at least 25% of nominal value must be transferred as per the Companies Rules 2014.
- Collateral Security Debentures
- Debentures issued to a lender as secondary security for a loan; they may be recorded by a note only or by a Debenture Suspense entry, and interest is paid only if the loan defaults.
- Own Debentures
- Debentures purchased by the issuing company in the open market; profit or loss on purchase or cancellation is transferred to Capital Reserve or the Statement of Profit and Loss.
- Sinking Fund
- Annual appropriation from profits set aside and invested to provide funds for redemption of debentures; the balance is transferred to General Reserve on redemption.
- Schedule III Balance Sheet
- Format prescribed by the Companies Act 2013 showing Equity and Liabilities and Assets in current and non-current classifications, with notes to accounts.
- Contingent Liability
- A possible obligation depending on a future event; not recognised in the Balance Sheet but disclosed by way of notes to accounts.
- Note to Accounts
- Disclosure that breaks up a line item shown on the face of the financial statements, such as share capital or trade payables.
- Common-Size Statement
- Financial statement in which each item is expressed as a percentage of a common base, such as total assets or revenue from operations.
- Trend Percentage
- Percentage of a current-year item relative to the same item in the base year, calculated as current value divided by base value times 100.
- Quick Ratio
- Quick assets divided by current liabilities, where quick assets exclude inventory and prepaid expenses; a ratio of 1:1 is considered ideal.
- Capital Employed
- Shareholders' funds plus long-term debt; used as the denominator in Return on Investment and as a measure of long-term funds employed.
- Operating Activities
- Principal revenue-producing activities; under the indirect method, net profit before tax is adjusted for non-cash items and working capital changes.
- Cash Equivalents
- Short-term highly liquid investments with original maturity of three months or less, readily convertible to known cash amounts with insignificant risk of change in value.
- Non-cash Transactions
- Investing and financing transactions that do not require cash, such as issue of shares for assets or conversion of debentures; excluded from the Cash Flow Statement and disclosed separately.
- Receipts and Payments Account
- Summary of the cash book of a not-for-profit organisation, recording all receipts and payments of cash and bank, capital and revenue, for the accounting period.
- Income and Expenditure Account
- Nominal account of a not-for-profit organisation prepared on accrual basis, recording revenue items only; its surplus or deficit is added to the Capital Fund.
- Capital Fund
- The excess of assets over liabilities of a not-for-profit organisation, shown in the Balance Sheet and adjusted by the surplus or deficit of the year.
- Specific Donation
- Donation received for a specified purpose such as a building or prize fund; treated as a capital receipt and shown in the Balance Sheet, not as income.
- Computerised Accounting System
- An accounting information system using hardware, software, data, people and procedures to record, process and report financial transactions automatically.
- DBMS
- Database Management System; software such as MySQL or Oracle used to create, store, retrieve and manage the accounting database.
- Primary Key
- A field in a database table that uniquely identifies each record, such as a ledger code or voucher number.
- Tailor-made Software
- Accounting software developed specifically for an organisation's requirements; also called bespoke software, it offers high fit but higher cost.
- Profit and Loss Appropriation
- Account prepared after the Profit and Loss Account to distribute profit among partners through interest on capital, salary, commission and share of profit.
- Fixed Capital Account
- Capital account that records only permanent capital contributions and withdrawals; all other adjustments pass through the partners' current accounts.