KASNEB CS21 key terms

A system where every transaction is recorded in at least two accounts, with equal total debits and credits, so the accounting equation stays balanced and errors are easier to detect.

Accounting that records revenue when earned and expenses when incurred, regardless of when cash moves, giving a more faithful picture of performance than cash timing alone.

The rule that expenses are recognised in the same period as the revenues they helped generate, so reported profit reflects the true cost of earning that income.

A listing of all ledger account balances at a date, used to check that total debits equal total credits before preparing financial statements.

A record of a transaction showing the accounts debited and credited, the amounts, the date and a brief explanation, forming the first step in the accounting cycle.

The systematic allocation of the cost of a non-current asset over its useful life, reflecting wear, tear or obsolescence rather than a fall in market value.

The value at which an asset appears in the statement of financial position, being its original cost less accumulated depreciation and any impairment losses.

A reduction in the recoverable amount of an asset below its carrying amount, requiring the book value to be written down and a loss recognised in profit or loss.

The excess of current assets over current liabilities, measuring the short-term funds available to run day-to-day operations and meet near-term obligations.

Current assets divided by current liabilities, showing how many times short-term obligations could be covered by assets expected to convert to cash within a year.

The ease and speed with which an asset can be converted into cash without significant loss of value, and the ability of a firm to meet obligations as they fall due.

A projection of expected cash receipts and payments over future periods, used to anticipate surpluses or shortfalls and plan borrowing or investment.

The principle that a sum received today is worth more than the same sum received later, because today's money can be invested to earn a return.

The sum of a project's future cash flows discounted to today's value minus the initial cost; a positive result suggests the project adds value.

The rate used to convert future cash flows into present value, often reflecting the cost of capital or the required return on an investment.

The possibility that a borrower or counterparty fails to meet interest or principal obligations on time, causing the lender a financial loss.

A statistical method that converts borrower characteristics into a numeric score predicting the likelihood of repayment, used to speed and standardise lending decisions.

An asset pledged by a borrower that the lender may seize and sell if the loan is not repaid, reducing the lender's loss in the event of default.

The loan amount expressed as a percentage of the pledged asset's value; a higher ratio means less borrower equity and greater lender exposure.

An organisation that collects and maintains records of borrowers' repayment history and shares them with lenders to support credit assessment.

A document summarising a borrower's borrowing history, repayment behaviour and outstanding obligations, used by lenders to judge creditworthiness.

The system of rules, practices and processes by which a company is directed and controlled, balancing the interests of shareholders, management and other stakeholders.

The conflict of interest that arises when managers, acting as agents, pursue their own goals rather than the interests of the shareholders they represent.

The group elected by shareholders to oversee the company's strategy and management, appoint senior officers and ensure accountability to owners.

A subcommittee of non-executive directors that oversees financial reporting, internal controls and the relationship with external auditors, strengthening accountability.

The policies and procedures a business uses to safeguard assets, ensure reliable records and prevent fraud or error in its operations.

Splitting tasks so that no single person controls a whole transaction from start to finish, reducing the chance of error or fraud going undetected.

The set of legal and organisational measures that safeguard personal information from unauthorised access, misuse or disclosure, giving individuals rights over their data.

The process of deciding who may view or change a system's resources, enforced through passwords, roles and permissions to protect sensitive information.

The principle that information should be disclosed only to those authorised to see it, protecting privacy and preserving trust in professional and business relationships.

The delivery of computing services such as storage and software over the internet, allowing users to access resources on demand without owning the underlying infrastructure.

A structured arrangement of formulas and input cells in a spreadsheet used to forecast, analyse or test scenarios, where changing inputs updates the outputs automatically.

A situation in which a person must choose between options that each involve conflicting moral principles, with no alternative free of some harm or compromise.

An attitude of questioning assumptions and being alert to possible misstatement or fraud, rather than accepting information at face value.

A legally enforceable agreement between two or more parties that creates rights and obligations, generally requiring offer, acceptance, consideration and intention to be bound.

A failure to exercise the degree of care a reasonable professional would exercise, resulting in loss or harm to another party who relied on that work.

Any person or group with an interest in an organisation's activities and outcomes, such as shareholders, employees, customers, suppliers, lenders and the community.