accounting

Depreciation

an estimate loss in value of a non-current asset over a period of time

irrecoverable debt

the amount owing to the business that cant be paid back by trade receivables

provision for irrecoverable debt

the estimated amount a business will lose in a financial year due to irrecoverable debt

net profit/loss calculation (incomplete record)

closing capital - opening capital + drawings

opening capital calculation (incomplete record)

opening assets - opening liabilities

closing capital calculation (incomplete record)

closing assets - closing liabilities

total sales/revenue

cash received + closing TR - opening TR

total purchases

cash paid + closing TP - opening TP

3 types of account

1. personal acc

2. real acc

3. nominal acc

personal acc contains:

TR acc and TP acc

real acc :

all the assets except debtors

nominal acc :

expense(Debit) and income(Credit)

capital expenditure

improving, or extending non-current assets that provides long-term benefits

revenue expenditure

day-to-day running of the business, providing short-term benefits

accrual concept

record on current period

prudence principle

don't overstate profits, assets and understate liabilities, loss

consistency principle

always use the some methods

materiality principle

low value items like calculators which lasts for long time should be recorded as expenses, not NCA

realisation principle

revenue recognised only when goods are delivered to customers

duality

every transaction must have two entries (one debit and one credit)

money measurement

record money items only (not Non-monetary items like employee's motivation or energy)

going concern

business continues in the unforeseeable future

business entity

business is separated from owners

historic cost