BOOK-KEEPING TERMS
IMPORTANT DEFINITION
6/20/2014
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SAELOUM HILAAL
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IMPORTANT BOOK-KEEPING NOTES.
1.
CREDITORS: Are the people or institutions that
extend credit in another persons or business organization.
2.
BUSINESS ENTITY CONCEPT: It states that the
business is a separate entity from the owner of that business.
3.
TRADING ACCOUNT: It is an account opened for the
purpose of calculating/computing either gross profit or gross loss of the
business organization at the end of accounting period.
4.
DEPRECIATION: Is the gradual decrease in the
value of an asset from any cause over a time of its use. Depreciation can be
caused by tear and wear, obsolescence, and exhaustion.
5.
ACCRUAL CONCEPT: This refers to cost incurred or
revenue earned but not yet paid or received at the end of accounting
period/year.
6.
NUGATORY EXPENDITURE: This refers to payments
out of public funds but for which no benefits had been received by the
government.
7.
VIREMENT: This refers to a n authority granted
by one minister to another on access of funds when the former is replaced by
the latter.
8.
COLLECTOR OF REVENUE: This is an officer who has
been appointed by the receiver of the revenue to perform collecting and
accounting function on behalf of his respective appointing authority.
9.
CIVIL CONTIGENCY FUND: It is the fund especially
established for the purpose of meeting government expenditure on which the
accounting officer was unable to foresee before in his annual estimated
expenditure.
1
PAYMASTER GENERAL: It is the fund especially
established for the purpose of meeting government expenditure on which the
accounting officer was unable to foresee before in his annual estimated
expenditure.
11.
FIVE ERRORS WHICH DO NOT AFFECT TRIAL BALANCE
ARE AS SHOWN BELOW:
·
Errors of commission
·
Errors of principle
·
Errors of omission
·
Errors of compensation
·
Errors of complete reversal
12.
AUDITING OF OBJECTIVES:
·
Defection of errors
·
Prevention of errors
·
To examine the financial statements of the
business so as to form an opinion as to whether or not they show a true and
fair view of financial position of the business.
·
Reporting on the strengthen or/and the
weaknesses of the internal control system of the firm
·
Prevention of frauds.
NB: (FRAUD)
This is intentional misrepresentation or
alteration of accounting records regarding sales, revenues, expenses and other
factors for profit motive such as inflating company, stock, values obtaining
more favorable financing or avoiding debt obligation.
13.
PREPAID INCOME: This refers to the income which
has been received but not yet earned by the end of accounting period. Income
like this is shown as liabilities in the balance sheet.
14.
ACCOUNT SALES: It is the statement prepared by
the consignee and forwarded to the consignor that shows the value of sales
expenses incurred by him, his commission and the net proceeds due to the
consignor.
15.
ERROR OF COMPLETE REVERSAL OF ENTRY: This is a
kind of error in which a transaction is recorded to the wrong side of the
account.
16.
CAPITAL EXPENDITURE: Is an expenditure on buying
fixed assets or adding value to them. It is also referred as an expenditure
which do not arise out of normal running activities of the business.
17.
AUDITING: This is the process of independently
examining financial statements, books of accounts and records of enterprise by
an auditor in order to check whether or not financial statements are prepared according
to the General Accepted Accounting Principles (G.A.A.P) and that they show a
fair and true and true view of states of affairs of the business. Audit has got
many types but among of them are as explained below:
·
PROCEDURAL AUDIT: It is the examination and
review of the internal procedures used to process and record transactions of an
organization.
·
MANAGEMENT AUDIT: It is kind of audit conducted
to investigate the management aspect of a business.
·
STANDARD AUDIT: It is a type of audit conducted
to ascertain whether the clients accounting systems complies with the
requirement of standards set by the professional bodies.
·
BALANCE SHEET AUDIT: It refers to an auditors
verification of the value of assets, liabilities, the balance of reserves and
provisions and the amount of profit earned or loss incurred by a firm during a
financial year.
·
VOUCHING AUDIT: It refers to the kind of audit
whereby the auditor checks each and every transaction right from the origin in
the books of price entry till they are posted.
·
FINAL COMPLETED AUDIT: It is the kind of audit
carried out at the end of the financial period after all the books of accounts
have been balanced and a financial statement has been prepared.
18.
BUDGETING: Generally refers to listing of all
planned expenses and revenues. It is a process of planning for saving and
spending.
19.
BILL OF EXCHANGE: It is unconditional order in
writing, signed and addressed by one person (Drawer) to another (Drawee),
requiring the Drawee to pay on demand, or at determinable or fixed future date,
a specified sum of money to the third person (Payee).
20.
PUBLIC DEBT: This is a debt owed by any level of
government either central, municipal or local government as a result of the
government borrowing from either internal or external sources.
21.
THE IMPREST SYSTEM: It is an arrangement whereby
at the beginning of the accounting period, a petty cashier is supplied with a
fixed amount of money known as cash float which he uses to meet the petty
expenditure for a given period –such as week or month.
22.
INTERNAL CONTROL: This is the whole system of
controls, financially and otherwise, established by the government in order to
carry on a business of an enterprise in an orderly and efficient manner.
23.
AUDIT PROGRAMME: It is a detailed plan of the
auditing work to be performed, specifying the procedures to be followed in
verification of each item in the financial statement and giving the estimated
time required
24.
AUDITOR’S OPINION: It is an auditor’s view on whether
or not financial statements and books of accounts audited show true financial
position of an organization.
25.
AN AMBIT TO VOTE: Is the total amount of
expenditure vote approved for the year to which accounting officers’ annual
expenditure must be limited.
26.
C & AG: This stands for “Controller and
Auditor General”. This is an officer in the public services who is appointed by
the president of the United Republic and charged with the duties and power of
controlling payments from the consolidated fund on behalf of national assembly.
Controller and
Auditor General has the following
functions:
·
Examination into the accounts of all accounting
officers and receivers of revenue.
·
Examiner of other people entrusted with the
revenue collection, receipts, custody, issue or payments of public money.
·
Controller of payments from consolidated funds
on behalf of the national assembly.
PREPARED
BY:
KIM SAELOUMS SIRLIIM.
Hakuna maoni:
Chapisha Maoni