The accounting cycle represents a standardised sequence of procedures that accountants follow to record, process and report financial transactions during a specific accounting period.
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Generally Accepted Accounting Principles (GAAP) function as a comprehensive framework of accounting standards, procedures and guidelines that govern financial reporting.
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Accounts payable (AP) represents the money a company owes to vendors or suppliers for goods and services purchased on credit. These short-term debt obligations appear as liabilities on a company's balance sheet, reflecting unpaid bills that require settlement within a specified timeframe.
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Capital represents accumulated assets used to generate wealth and economic value. Unlike ordinary resources consumed in daily operations, capital functions as a productive resource that creates additional value when properly deployed. In financial contexts, it typically refers to money invested to generate returns.
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Capital expenditure (CapEx) refers to funds used by organisations to acquire, upgrade or maintain physical assets such as property, industrial buildings, equipment or technology infrastructure.
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Cash-basis accounting represents a straightforward method of financial record-keeping where transactions are recognised only when money physically changes hands. In other words, transactions are recorded only when money goes in or out of an account.
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Cash flow insolvency occurs when a business cannot meet its financial obligations as they fall due, despite potentially having positive net assets. This situation represents a fundamental liquidity crisis where a company has insufficient ready cash to pay creditors, suppliers, employees or other parties on time.
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In financial accounting, cash equivalents represent short-term, highly liquid financial instruments that organisations can readily convert to cash with minimal risk of value change.
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A chart of accounts represents the organised, comprehensive listing of every account in an organisation's accounting system. Think of it as the financial filing cabinet where each drawer and folder has a specific purpose and designation.
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Closing entries are specialised journal entries made at the conclusion of an accounting period to reset temporary accounts to zero and transfer their balances to permanent accounts. They represent a crucial step in the accounting cycle that prepares the books for a new fiscal period.
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In accounting, a debit balance refers to the amount, shown in the record of a company's finances, by which its total debits are greater than its total credits. This concept is fundamental to the double-entry bookkeeping system used in financial record-keeping.
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The foundation of modern accounting rests upon two essential concepts: debits and credits. Though these terms often cause confusion for beginners, they represent straightforward accounting mechanics. A debit entry represents money flowing out or an increase in assets, while a credit entry indicates money coming in or an increase in liabilities and equity.
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At its core, depreciation represents the systematic allocation of an asset's cost over its useful life. Rather than recording the entire expense when purchasing a long-term asset, businesses spread this cost across multiple accounting periods that benefit from the asset's use.
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Dividends represent distributions of a company's earnings to its shareholders. When businesses generate profits, they face three primary options: reinvest those earnings into operations, retain them as cash reserves or distribute a portion to shareholders as dividends.
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Equity simply means ownership in a business. It represents the residual interest in the assets after deducting liabilities. It's calculated with a basic formula: Total Assets minus Total Liabilities.
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Financial ratios represent mathematical relationships between different elements found in financial statements. These calculated values quantify the connections between various financial data points, creating standardised metrics that allow for meaningful interpretation of a company's performance.
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When examining business resources, fixed assets represent tangible, long-term resources that organisations own and use in their operations. These physical items hold economic value and typically remain in service for extended periods, often years or decades.
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Quantitative analysis refers to the systematic examination of numerical data through mathematical and statistical techniques to uncover patterns, test hypotheses and develop models that explain relationships between variables.
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SFTP (Secure File Transfer Protocol) is a network protocol that provides secure file access, transfer and management capabilities over any reliable data stream. Unlike its predecessor FTP, SFTP operates through an encrypted SSH (Secure Shell) tunnel, ensuring that all transmitted data remains protected from unauthorised access.
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