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Journal entries a record of the business transactions in the accounting books of a business.

Lease a legal, binding contract outlining the terms under which one party agrees to rent

property owned by another party.

Lessee a person who is paying to lease an asset.
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Liabilities the future sacrifices of economic benefits that the entity is obliged to make to

other entities as a result of past transactions or other past events.
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Liquidity ratios are ratios assessing how easily a particular category of assets can be
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converted into cash. The focus is on current assets e.g., debtors and inventories: these
can be converted into cash within a relatively shorter period – not exceeding one year.
Thus, seen as appropriate in settling the current liabilities like creditors, who need to
be paid within one accounting period. They are computed by dividing current assets by
current liabilities.

Management accounting is a branch of accounting designed to assist managers in
carrying out their basic functions of planning, control, and decision-making. It utilises
different methods and techniques from cost accounting and other fields of business,
economics, and statistics to process information to support management functions.

Market prospects ratios also known as investors ratios are designed to assist shareholders
and potential investors to evaluate the performance of the business in terms of the value
of its shares and expected returns. The computations of these ratios require the use of
some financial data from the inventory exchange market.

Operating activities are the principal revenue-generating activities of a business and
other activities resulting in a change of current assets and current liabilities provided
they do not fall under the categories of financing and investing activities

Payroll the compensation a business must pay to its employees for a set period on a given

date.

Premium an additional cost charged on top of an asset’s/security’s usual cost/par value.

Profitability ratios are financial ratios designed to measure the ability of a business
to generate profit that is revenue over expenses. A good example of profitability ratios
include profit margin which relates profit to the amount of revenue.

Student’s Book Form Five
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