IB Business Management 3.4 Final Accounts Key Definitions

The value of an asset as recorded in a company's financial statements, usually the original cost minus depreciation, amortization, or impairment costs.

The unique attributes or capabilities that allow a business to outperform its competitors. It enables a company to offer superior value to customers, whether through lower costs, differentiated products, superior quality, brand reputation, or innovation.

The direct costs associated with producing or purchasing goods that a company sells during a period, including raw materials and labour.

Individuals or entities to whom a business owes money, typically suppliers or lenders.

The process of allocating the cost of a tangible asset over its useful life to account for wear and tear, obsolescence, or usage.

The set of financial statements prepared at the end of an accounting period, usually including the profit and loss account and the balance sheet.

An intangible asset representing the value of a business’s reputation, customer relationships, brand recognition, or other non-physical advantages.

The original purchase price of an asset, recorded in accounting records, without adjustments for inflation or market value changes.

Non-physical assets with value, such as patents, trademarks, copyrights, and goodwill.

The total assets of a business minus its total liabilities, representing the owners’ equity.

A Profit and Loss Appropriation Account is an extension of the Profit and Loss Account that shows how a company or partnership allocates its net profit at the end of an accounting period. It is mainly used by partnership firms and companies to distribute profits among partners, shareholders, or reserves.

The estimated value of an asset at the end of its useful life, often used in depreciation calculations.

A depreciation method where an asset’s cost is reduced evenly over its useful life.

A financial statement that presents a company’s financial position at a specific point in time, listing assets, liabilities, and equity.

A financial statement showing a company's revenues, expenses, and profits over a specific period.

A Trading Account is a financial statement that forms part of the final accounts of a business. It is prepared to determine the gross profit or gross loss of a company during an accounting period.

A depreciation method where depreciation expense is based on an asset’s usage, output, or activity level

The practice of manipulating financial statements to make a company's financial position appear stronger than it actually is.