accounting

account

a list of all transactions related to a person property or income

running balance format

a vertical format in which an account is drawn and bank statements are presented

debit

left hand side of an account

credit

right hand side of an account

book keeping

the recording of business data in a chronological order

accounting

the language of business . its concerned with recording classifying and reporting economic data

internal users

a company’s managers and employees

external users

banks, governmental agencies, financial analysts

current assets

the assets which are used, sold or converted into cash within one year

non current assets

assets which are expected to be held for more than a year and provide long term benefits to the business

liability

the amount a business owes to other.

what are the 2 types of liabilities

long term and short term liabilities

short term liabilities

liabilities that are payable within a year

long term liabilities

liabilities that are payable after a year

capital

the initial investment of assets or goods by the owner when starting a business

drawing

the amount of goods or cash withdrawn by the owner from the business for personal use

inventory

goods unsold at the end of an accounting period

trade receivables

people or businesses who owe you money

trade payables

people or businesses you owe money

state three ways the accounting equation can be expressed

assets= capital + liabilities

capital= assets - liabilities

liabilities= assets - capital

examples of liabilities

loan and trade payables

examples of assets

a loan to employee , balance at bank, car , inventory , trade receivables

if you pay 400 by cheque to a trade payable what is the effect on assets and liabilities

assets = -400

liabilites= - 400

if you buy machinery by a 5000 cheque whats the effect on your assets and liabilities

assets= +5000

liabilites = no change

when writing a statement of financial position what information should be included

Title; statement of financial position

non current assets. current assets total assets. non current liabilities. currrent liabilities. total liabilities