Customer deposits and advances funds paid in advance

Customer Deposits and Advances: Funds paid in advance by customers. Until the company has performed
its obligations (either supplying goods or providing services) to its customers, this amount remains as a
liability because it is a form of financial obligation. When the goods or services are delivered, the company
would then earn the money.
Other Liabilities: Comprise provisions, pre-collected revenue (or unearned revenue) resulting from
customer deposits and advances, short-term notes payable and salaries/wages payable, and other long-
term liabilities.

Kiara Pereira Gonzalez Managerial Finance and Accounting (IB) Maastricht University
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Non-Current Liabilities: Obligations that are likely to require an outflow of economic benefits after one
financial year.
Paid-In Capital (sometimes Labeled Share Capital or simply Capital): The amount raised as capital
contributions from the company’s shareholders. In other words, the amount of shareholders’ equity that
shareholders have contributed to the corporation. Some companies may have different types of share
capital, and would label them as or dinary share capital or preference shares (also called “preferred stock”
and “common stock,” respectively).
Operating Activities: Activities that create revenue or expense in the entity’s major line of business; a
section of the statement of cash flows.
Investing Activities: Activities that increase or decrease the long-term assets available to the business; a
section of the statement of cash flows.
Financing Activities: Activities that obtain from investors and creditors the cash needed to launch and
sustain the business; a section of the statement of cash flows.
Statement of Cash Flows: Reports cash receipts and cash payments classified according to the entity’s
major activities: operating, investing, and financing.
Ethics: Shaped by our cultural, socioeconomic, and religious backgrounds. Standards of right and wrong
that transcend economic and legal boundaries. Ethical standards deal with the way we treat others and
restrain our own actions because of the desires, expectations, or rights of others, or with our obligations
to them. An ethical analysis is needed to guide judgment for making decisions.
Chapter 2 – Recording Business Transactions
Transactions: Any event that has a financial impact on the business and can be measured reliably.
Account: T he record of the changes that have occurred in a particular asset, liability, or shareholders’
equity during a period.
Assets: Economic resources that provide a future benefit for a business.
Cash: Money and any medium of exchange including bank account balances, paper currency, coins,
certificates of deposit, and checks.
Accounts Receivable: Most companies sell their goods and services and receive a promise for future
collection of cash. The Account Receivable account holds these amounts. Some entities prefer to use the
label Debtors or Receivables for this account.