EBSComplete
EBS MBA AC Glossary MBA ACAccounting
Glo ssary Concepts & Key Terms Study Guide (2026 Updated)
Study this set o nline at: https://www.cram.co m/flashcards/ebs-mba-ac-glo ssary-
1566016
Accounti ng i s def i ned as a seri es of processes and techni ques used to i denti f y,
measure and communi cate economi c i nf ormati on whi ch users f i nd hel pf ul i n maki ng
Accounti ng
deci si ons. I t attempts to ref l ect economi c acti vi ty i n an organi sati on and i s
usual l y expressed i n money val ues.
T he accounti ng equati on expresses the rel ati onshi p between resources and the
f unds provi ded to acqui re these, i .e. Assets – Li abi l i ti es = Owners’ equi ty. I t i s a
Accounti ng E quati on col l ecti on of bal ances af ter each transacti on has been compl eted and recorded.
Note that the accounti ng entri es i nvol ve a mi xture of cash-dri ven i tems and
j udgement-dri ven i tems.
F i nanci al accounti ng (or f i nanci al reporti ng) deri ves f rom the l egal obl i gati on on
di rectors and managers to report to the owners of the busi ness (the sharehol ders)
Accounti ng, F i nanci al
how they have used the resources at thei r di sposal duri ng the accounti ng peri od
under revi ew (usual l y annual ).
Management accounti ng provi des the i nf ormati on f rom the accounti ng process
managers need, e.g. actual and proj ected costs, pri ces of i ndi vi dual products,
Accounti ng, Management actual and proj ected costs of i ndi vi dual departments and i ndi vi dual processes,
proj ected sources and uses of cash, proposal s f or maj or i nvestment i n pl ant and
equi pment, and many other detai l s.
, EBSComplete
EBS MBA AC Glossary MBA ACAccounting
Glo ssary Concepts & Key Terms Study Guide (2026 Updated)
Study this set o nline at: https://www.cram.co m/flashcards/ebs-mba-ac-glo ssary-
1566016
F i nanci al statements are drawn up on the accrual basi s i nf orm users not onl y of past
Accrual Basi s of Accounti ng transacti ons i nvol vi ng payment and recei pt of cash but they al so ref l ect the
obl i gati ons to pay cash or the prospect of recei vi ng cash i n the f uture.
T he accrual s conventi on states that cash does not have to be recei ved to create
val ue; an obl i gati on f rom a credi tworthy customer i s good enough to be cal l ed a
sal e. T he accrual s conventi on al so covers the si tuati on where a sol e trader, or
Accrual s Conventi on
company or any other enti ty pays an i nvoi ce f or a product or servi ce whi ch covers a
peri od stretchi ng beyond the date he/she draws up the f i nanci al statements. T he
accrual s conventi on i s sal es-rel ated.
I AS 1 attempts to i ndi cate the al l owed l evel of aggregati on: each materi al cl ass
of si mi l ar i tems must be presented separatel y; and i tems of a di ssi mi l ar nature of
Aggregati on f uncti on shoul d be shown separatel y unl ess they are i mmateri al . So i f a l i ne i tem
i s not i ndi vi dual l y materi al i t shoul d be aggregated wi th other i tems ei ther on
the f ace of those statements or i n the notes.
T he al l ocati on conventi on i s a two-step process to i s to determi ne how much of
each means of producti on, expressed i n money terms, was consumed duri ng the
accounti ng peri od and to determi ne how much of each means of producti on, agai n
expressed i n money terms, shoul d be matched wi th sal es revenue and how much
Al l ocati on Conventi on
shoul d be added to the cl osi ng work-i n-progress (i nventory of unf i ni shed goods)
and to the i nventory of f i ni shed goods (on the assumpti on that goods remai n
unf i ni shed at the end of the accounti ng peri od and that the busi ness produces
more f i ni shed uni ts than i t sel l s). T he al l ocati on conventi on i s cost-rel ated.
, EBSComplete
EBS MBA AC Glossary MBA ACAccounting
Glo ssary Concepts & Key Terms Study Guide (2026 Updated)
Study this set o nline at: https://www.cram.co m/flashcards/ebs-mba-ac-glo ssary-
1566016
Conti ngent assets are ’a possi bl e asset that ari ses f rom past events and whose
Asset, Conti ngent exi stence wi l l be conf i rmed onl y by the occurrence or non-occurrence of one or more
uncertai n f uture events not whol l y wi thi n the control of the company’.
Current assets are those assets whi ch are expected to be sol d or consumed duri ng
the normal operati ng cycl e of the company, usual l y one year. T ypi cal l y i nventori es
Asset, Current
(raw materi al s, work-i n-progress, and f i ni shed goods), debtors (i ncreasi ngl y known
by i ts Ameri can term accounts recei vabl e) and cash are regarded as bei ng current.
F i xed assets are those assets that a company keeps f or a substanti al peri od of
ti me (l i ke l and and bui l di ngs or pl ant and equi pment or motor vehi cl es), not f or
Asset, F i xed resal e, but to use i n the course of busi ness. I t i s the i ntenti on of management as to
the use of the asset, not i ts physi cal characteri sti cs, that determi nes whether or
not i t i s cl assi f i ed as a f i xed asset.
Assets are def i ned as ’a resource control l ed by an enti ty as a resul t of past events;
and f rom whi ch f uture economi c benef i ts are expected to f l ow to the enti ty’.
Asset, I ntangi bl e
I ntangi bl e assets are a sub-set of thi s def i ni ti on and attract a f urther def i ni ti on
as ’i denti f i abl e non-monetary assets wi thout physi cal substance’.
EBS MBA AC Glossary MBA ACAccounting
Glo ssary Concepts & Key Terms Study Guide (2026 Updated)
Study this set o nline at: https://www.cram.co m/flashcards/ebs-mba-ac-glo ssary-
1566016
Accounti ng i s def i ned as a seri es of processes and techni ques used to i denti f y,
measure and communi cate economi c i nf ormati on whi ch users f i nd hel pf ul i n maki ng
Accounti ng
deci si ons. I t attempts to ref l ect economi c acti vi ty i n an organi sati on and i s
usual l y expressed i n money val ues.
T he accounti ng equati on expresses the rel ati onshi p between resources and the
f unds provi ded to acqui re these, i .e. Assets – Li abi l i ti es = Owners’ equi ty. I t i s a
Accounti ng E quati on col l ecti on of bal ances af ter each transacti on has been compl eted and recorded.
Note that the accounti ng entri es i nvol ve a mi xture of cash-dri ven i tems and
j udgement-dri ven i tems.
F i nanci al accounti ng (or f i nanci al reporti ng) deri ves f rom the l egal obl i gati on on
di rectors and managers to report to the owners of the busi ness (the sharehol ders)
Accounti ng, F i nanci al
how they have used the resources at thei r di sposal duri ng the accounti ng peri od
under revi ew (usual l y annual ).
Management accounti ng provi des the i nf ormati on f rom the accounti ng process
managers need, e.g. actual and proj ected costs, pri ces of i ndi vi dual products,
Accounti ng, Management actual and proj ected costs of i ndi vi dual departments and i ndi vi dual processes,
proj ected sources and uses of cash, proposal s f or maj or i nvestment i n pl ant and
equi pment, and many other detai l s.
, EBSComplete
EBS MBA AC Glossary MBA ACAccounting
Glo ssary Concepts & Key Terms Study Guide (2026 Updated)
Study this set o nline at: https://www.cram.co m/flashcards/ebs-mba-ac-glo ssary-
1566016
F i nanci al statements are drawn up on the accrual basi s i nf orm users not onl y of past
Accrual Basi s of Accounti ng transacti ons i nvol vi ng payment and recei pt of cash but they al so ref l ect the
obl i gati ons to pay cash or the prospect of recei vi ng cash i n the f uture.
T he accrual s conventi on states that cash does not have to be recei ved to create
val ue; an obl i gati on f rom a credi tworthy customer i s good enough to be cal l ed a
sal e. T he accrual s conventi on al so covers the si tuati on where a sol e trader, or
Accrual s Conventi on
company or any other enti ty pays an i nvoi ce f or a product or servi ce whi ch covers a
peri od stretchi ng beyond the date he/she draws up the f i nanci al statements. T he
accrual s conventi on i s sal es-rel ated.
I AS 1 attempts to i ndi cate the al l owed l evel of aggregati on: each materi al cl ass
of si mi l ar i tems must be presented separatel y; and i tems of a di ssi mi l ar nature of
Aggregati on f uncti on shoul d be shown separatel y unl ess they are i mmateri al . So i f a l i ne i tem
i s not i ndi vi dual l y materi al i t shoul d be aggregated wi th other i tems ei ther on
the f ace of those statements or i n the notes.
T he al l ocati on conventi on i s a two-step process to i s to determi ne how much of
each means of producti on, expressed i n money terms, was consumed duri ng the
accounti ng peri od and to determi ne how much of each means of producti on, agai n
expressed i n money terms, shoul d be matched wi th sal es revenue and how much
Al l ocati on Conventi on
shoul d be added to the cl osi ng work-i n-progress (i nventory of unf i ni shed goods)
and to the i nventory of f i ni shed goods (on the assumpti on that goods remai n
unf i ni shed at the end of the accounti ng peri od and that the busi ness produces
more f i ni shed uni ts than i t sel l s). T he al l ocati on conventi on i s cost-rel ated.
, EBSComplete
EBS MBA AC Glossary MBA ACAccounting
Glo ssary Concepts & Key Terms Study Guide (2026 Updated)
Study this set o nline at: https://www.cram.co m/flashcards/ebs-mba-ac-glo ssary-
1566016
Conti ngent assets are ’a possi bl e asset that ari ses f rom past events and whose
Asset, Conti ngent exi stence wi l l be conf i rmed onl y by the occurrence or non-occurrence of one or more
uncertai n f uture events not whol l y wi thi n the control of the company’.
Current assets are those assets whi ch are expected to be sol d or consumed duri ng
the normal operati ng cycl e of the company, usual l y one year. T ypi cal l y i nventori es
Asset, Current
(raw materi al s, work-i n-progress, and f i ni shed goods), debtors (i ncreasi ngl y known
by i ts Ameri can term accounts recei vabl e) and cash are regarded as bei ng current.
F i xed assets are those assets that a company keeps f or a substanti al peri od of
ti me (l i ke l and and bui l di ngs or pl ant and equi pment or motor vehi cl es), not f or
Asset, F i xed resal e, but to use i n the course of busi ness. I t i s the i ntenti on of management as to
the use of the asset, not i ts physi cal characteri sti cs, that determi nes whether or
not i t i s cl assi f i ed as a f i xed asset.
Assets are def i ned as ’a resource control l ed by an enti ty as a resul t of past events;
and f rom whi ch f uture economi c benef i ts are expected to f l ow to the enti ty’.
Asset, I ntangi bl e
I ntangi bl e assets are a sub-set of thi s def i ni ti on and attract a f urther def i ni ti on
as ’i denti f i abl e non-monetary assets wi thout physi cal substance’.
