Important business terms and phrases.
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A resource controlled by an entity as a result of past events and from which future economic benefits will flow, i.e. something valuable that a business controls or owns.
Expenditure on non-current assets or items that will be used in a business over a prolonged period of time, e.g. new building, building improvements, furniture, computer equipment.
An entity that is expected to continue to trade for the foreseeable future (normally one year). Financial statements are prepared on the "going concern" basis.
An obligation arising from past events, the settlement of which will result in an outflow of economic resources, e.g. bank loans, payables.
The ability to convert assets into cash to meet all obligations as they fall due.
An event or transaction that would affect a users' decision in regards to the accounts, either due to its value or nature.
Expenses paid in advance recorded as a current asset in the statement of financial position.
Expenditure incurred for the purpose of trade, e.g. salaries, rent, repairs.