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Prospectus a defined legal document describing a company’s securities that have been put

on sale.

Provisions refer to any funds set aside from a company’s profit for probable future
expenses or a reduction in the asset value, although the exact amount is unknown at
present e.g., provision for doubtful debts and allowances for discounts.
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Purchases day book is a book of prime entries that are used to record credit purchases
of goods.

Purchases ledger is a book that contains all the accounts of individual credit suppliers
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(the personal accounts) used to record credit transactions between business entities and
their suppliers of goods and services. The purchases ledger thus provides the detailed
transactions of each credit supplier of goods.

Reporting entity may also be referred to as an accounting entity, meaning a business
entity in respect of which the financial statements are prepared. The IFRS states that
reporting entity may have a legal obligation or may choose to prepare external financial
reports for the benefit of parties with an interest in its operations. These include suppliers,
lenders, and investors.

Retained earnings are the amount of profit remaining after the company has paid all of
the costs of goods sold, operating expenses, income taxes, and dividends to shareholders.
This represents the portion of the company’s equity that can be used, for instance, to
invest in new equipment, research and development, and marketing.

Revenue recognition principle asserts that revenue must be recognised as it is earned.
This means after a certain critical event has occurred such as the product being delivered
to the customer.

Sales day book is a book of prime entries that is used to record sales of goods made
on credit.

Sales ledger is a book that is used to record all the accounts of individual credit customers,
which are personal accounts. In other words, the sales ledger is used to record all
transactions made between credit customers for goods or services and the business entity.

Scrap value the worth of a physical asset’s individual components when the asset itself is

deemed no longer usable.

Share a unit of ownership interest in a corporation.

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