VCE Accounting - Unit 1 AOS 1 Terminology

A type of business that uses raw materials to make products.

Financial events are recorded and reported for a specific period of time, which allows valid comparisons of performance to be made (Accounting Assumption)

When two or more people are in a business together operating under their own names or a registered business name with a view to making a profit.

Revenue and expenses are recognised when they can be measured in a faithful and verifiable way (Accounting Assumption)

A type of business that buys inventory and resells them, usually at a higher price

Relevant information should be available to decision makers in time to influence their decisions (Qualitative Characteristic)

A business will continue to operate indefinitely and will not be wound up in the near future (Accounting Assumption)

Information can be confirmed as correct, and accounting information can be checked against business documents (Qualitative Characteristic)

When businesses buy on credit from their suppliers, and must pay off their account within a certain period of time.

The excess of revenues over expenses for a specific period of time

A decrease in assets or an increase in liabilities that result in a decrease in owner's equity

Business operators compete for a share of the dollars available for spending.

Data put into a meaningful form for particular use

The owner's remaining value or interest in a business after liabilities are deducted from assets

Customers who buy on credit and will pay off their account within a certain period of time.

Financial information should relate to an economic decision (Qualitative Characteristic)

Records, assets, liabilities and business activities of the entity must be kept separate from those of the owner or other entities (Accounting Assumption)

A type of business that performs a particular service for the customer, and receives a fee for their service.

An entity's present obligations to transfer economic resources to another entity

An exchange of either goods or services with another entity for payment

An increase in assets or decrease in liabilities, that result in an increase in owner's equity, achieved by providing goods or services to their customers

A type of business that combines different types of operation.

Present economic resources under the control of a business entity, with the potential to produce future economic benefits for the business

Users with a reasonable knowledge of business and economics should be able to find the financial information understandable (Qualitative Characteristic)

When a single owner operates the business in their own right, and under their own name or a registered business name.

Raw facts and figures

Financial reports should be prepared using consistent accounting methods so that performance can be compared (Qualitative Characteristic)

A suggested retail price set by a supplier.

Information being reported must be complete, without bias, and free from error (Qualitative Characteristic)

A percentage added to a product cost to determine the selling price.