Welcome to the Accounting Flashcards Tool. This is designed as a simple supplementary resource for the textbook ‘Short Introduction to Accounting’, and aims to help students grasp the meaning of the core essential terms within the book. Each term will appear on its own, and you can then click to check the definition. Click or press [space] to begin.

Profit (or loss) [ click for answer ] term: 1 of 11

The residual amount that remains after expenses have been deducted from income. [ click for next term ] definition: 1 of 11

Profit margin [ click for answer ] term: 2 of 11

Profit expressed as a percentage of sales, typically either as a gross profit margin (gross profit/sales), operating profit margin (operating profit/sales) or net profit margin (profit after tax/sales). [ click for next term ] definition: 2 of 11

Provision [ click for answer ] term: 3 of 11

A liability of uncertain timing or amount. [ click for next term ] definition: 3 of 11

Retained profit [ click for answer ] term: 4 of 11

A component of equity, equal to the cumulative profit earned by a company less the cumulative dividends paid to shareholders. [ click for next term ] definition: 4 of 11

ROCE [ click for answer ] term: 5 of 11

Return on capital employed, defined as either operating profit/capital employed or as NOPAT/capital employed; a measure of the rate of return on the total equity and debt investment in a company. [ click for next term ] definition: 5 of 11

ROE [ click for answer ] term: 6 of 11

Return on equity, defined as profit after tax/equity; a measure of the rate of return on shareholders’ investment in a company. [ click for next term ] definition: 6 of 11

Realisation [ click for answer ] term: 7 of 11

The process of conversion into cash. [ click for next term ] definition: 7 of 11

Recognition [ click for answer ] term: 8 of 11

The inclusion of an item in the financial statements. [ click for next term ] definition: 8 of 11

Reporting period [ click for answer ] term: 9 of 11

The period covered by financial statements, which for external financial reporting purposes is typically a quarter, half or full year. [ click for next term ] definition: 9 of 11

Share, or stock [ click for answer ] term: 10 of 11

An equity investment. A shareholder invests cash in a company in exchange for a percentage ownership (a share) of the equity of that company. Ownership of shares can be traded on a stock market. [ click for next term ] definition: 10 of 11

Working capital [ click for answer ] term: 11 of 11

A measure of the amount of finance needed to fund an organisation’s operating cycle. Defined as current assets less current liabilities (i.e. current net assets). [ End of flashcard 5 ] definition: 11 of 11