IBDP Business Unit 3 Key Terms

Contains financial information about an organization's assets, liabilities and the capital invested by the owners, showing a snapshot of the firm's financial situation.

• Balance sheet

• Profit and loss statement

• Final Accounts

• Expenses

The fall in the value of noncurent assets over time, caused by wear and tear (due to the asset being used) or obsolescence (out-dated).

• Goodwill

• Depreciation

• Intangible assets

• Historic cost

The indirect or fixed costs of production, such as administration charges, management salaries, insurance premiums and rent.

• Final accounts

• Depreciation

• Expenses

• Goodwill

The published annual financial statements that all limited liability companies are legally obliged to report, namely the balance sheet and the P&L account.

• Expenses

• Goodwill

• Final accounts

• Gross profit

An intangible asset which exists when the value of a firm exceeds its book value (the value of the firm's net assets).

• Expenses

• Depreciation

• Gross profit

• Goodwill

The difference between the sales revenue of a business and its direct costs incurred in making or purchasing the products that have been sold to customers.

• Gross profit

• Net profit

• Intangible assets

• Historic cost

Refers to the purchase cost of a particular fixed asset. It is used in the calculation of depreciation.

• Creditors

• Historic cost

• Intangible assets

• Goodwill

The value of an asset as shown on a balance sheet. The market value of assets can be higher than its book value because of intangible assets such as brand value or goodwill.

• Book value

• COGS

• COS

• Current assets

The direct costs of producing or purchasing stock that has been sold to customers.

• COGS

• COS

• Historic cost

• Annual cost

Suppliers who allow a business to purchase goods and/or services on trade credit.

• Debtors

• Suppliers

• Creditors

• Accounts