KCSE key terms

A system that records every transaction in at least two accounts, one debit and one credit, so total debits always equal total credits and the books stay balanced.

A list of all ledger account balances at a given date, used to check that total debits equal total credits before final accounts are prepared.

A page or record in the main book of accounts where transactions affecting one item, such as cash or a customer, are collected and balanced.

The two sides of an account. Debits record increases in assets and expenses, while credits record increases in liabilities, capital and income.

A statement showing what a business owns, owes and the owner's stake at a particular date, arranged as assets equal liabilities plus capital.

The part of the final accounts that calculates gross profit by deducting the cost of goods sold from net sales for a trading period.

The surplus left after subtracting the cost of goods sold from net sales, before any business expenses such as rent or wages are charged.

The final profit remaining after all operating expenses and other charges have been deducted from gross profit for the accounting period.

The direct cost of the goods actually sold during a period, found by adding opening stock to purchases and subtracting closing stock.

Short-term resources a business expects to convert into cash within a year, such as stock, debtors and cash at bank.

Debts a business expects to settle within one year, including trade creditors, bank overdrafts and short-term loans.

The money or resources the owner puts into a business; it is shown on the balance sheet as a claim on the assets of the enterprise.

The money available for day-to-day running, calculated by subtracting current liabilities from current assets; it shows short-term financial strength.

The gradual reduction in the value of a fixed asset due to wear and tear, age or obsolescence, charged as an expense over its useful life.

A method that spreads the cost of an asset evenly over its useful life by charging the same amount each year, based on original cost.

Long-term items a business owns and uses in its operations rather than for resale, such as land, buildings, machinery and vehicles.

Measures such as the current ratio and quick ratio that show whether a business can meet its short-term debts as they fall due.

A measure of how many times a business sells and replaces its stock in a period; a low rate may signal slow-moving or obsolete goods.

The process of comparing a business's cash book with its bank statement and explaining differences such as unpresented cheques and bank charges.

A book that records all money received and paid out, often combining the cash account and bank account in one record.

A separate record kept for small, routine payments such as postage and cleaning, usually operated on an imprest system.

A method of controlling petty cash where a fixed float is given to the cashier and restored to that amount after each period.

A business owned by two or more people who share capital, profits and losses under an agreement, usually with unlimited liability.

A business owned and controlled by one person, who takes all profits but also bears unlimited liability for the debts of the business.

A legal protection meaning owners of a company can lose only the money they invested, not their personal property, if the business fails.

Money raised by a company through issuing shares to investors, who then become part owners of the business.

A share of company profits paid to shareholders, usually declared after the annual accounts show a distributable profit.

The level of sales at which total revenue equals total costs, so the business makes neither a profit nor a loss.

Expenses that stay the same in total whatever the level of output, such as rent, insurance and salaries of permanent staff.

Expenses that change in direct proportion to output or sales, such as raw materials and packaging for each unit produced.

The gap between the actual or expected sales level and the break-even level, showing how far sales can fall before a loss occurs.

A plan showing expected cash inflows and outflows over future periods, used to predict shortages and arrange finance in advance.

The combination of product, price, place and promotion that a business controls to meet the needs of its target customers.

Dividing a market into groups of buyers with similar needs, such as by age, income or location, so products can be targeted effectively.

The specific group of customers whose needs a business chooses to serve with its product and marketing effort.

The activities used to inform and persuade customers to buy, including advertising, personal selling, sales promotions and public relations.

A written document setting out a business idea, its market, operations and financial forecasts, often used to raise finance.

The use of standard lines, symbols and views to communicate the exact shape and dimensions of an object for manufacture or construction.

A drawing method that shows an object from several directions, usually front, plan and side views, laid out flat on one sheet.

A three-dimensional drawing where the three axes are set 120 degrees apart, giving a pictorial view without perspective distortion.

A drawing made larger or smaller than the real object while keeping all proportions exact, using a stated ratio such as 1:50.

The rules and practices that prevent injury in a workshop, including correct use of guards, protective clothing and safe handling of tools.

Tools powered by the user rather than by electricity or fuel, such as hammers, chisels, saws and files, each with a correct technique.

A physical cover or device fitted to a machine to keep hands and clothing away from moving parts and flying chips.

Joining metal parts by melting a filler alloy between them; in electronics it makes both an electrical and a mechanical connection.

A drawing that uses standard symbols to show how electrical or electronic components are connected, without regard to physical layout.

A component that limits or controls the flow of current in a circuit, with its value given in ohms by a colour code.

The relationship stating that current through a conductor equals the voltage across it divided by its resistance, written I equals V over R.

The practice of growing different crops in a planned sequence on the same land to maintain soil fertility and break pest cycles.

The wearing away of topsoil by wind or water, reducing fertility; controlled by terracing, contour ploughing, cover crops and mulching.

Covering the soil surface with dry grass, leaves or plastic to conserve moisture, suppress weeds and reduce erosion.

Organic material such as animal dung or compost added to soil to supply nutrients and improve its structure and water-holding capacity.

Supplying water to crops by artificial means, such as furrows, sprinklers or drip lines, when rainfall is insufficient.

Methods such as drying, salting, smoking, canning or refrigeration that slow spoilage and keep food safe for longer.

Practices that keep people and surroundings clean to prevent disease, including hand washing, safe water and proper waste disposal.

Immediate, temporary care given to an injured or sick person before professional medical help arrives, aimed at saving life.

The process of identifying an opportunity, taking a risk and organising resources to start and run a business venture.