FUNDEMENTALS OF ACCOUNTING

FLASHCARDS

. Fundamentals of AccountingAccounting Equation: The balance sheet formula showing that total assets always equal capital plus total liabilities ($\text{Assets} = \text{Capital} + \text{Liabilities}$).Assets: Resources owned or controlled by a business as a result of past events, expected to bring future economic benefits.Non-current Assets: Long-term resources acquired for use within the business to help generate revenue, held for more than 12 months and not intended for resale (e.g., premises, machinery, vehicles).Current Assets: Short-term resources that are cash, expected to be converted into cash, or consumed within 12 months (e.g., inventory, trade receivables, bank balance).Liabilities: Financial obligations or debts arising from past events, the settlement of which will require an outflow of resources.Non-current Liabilities: Obligations that are not due for repayment within the next 12 months (e.g., long-term bank loans, mortgages).Current Liabilities: Short-term debts due to be settled within 12 months (e.g., trade payables, bank overdrafts, accrued expenses).Capital (Owner’s Equity): The total value of resources contributed to the business by the owner, representing the owner’s claim against the assets of the business.Drawings: Cash or goods taken out of the business by the owner for personal use, which reduces total capital.

• Accounting Equation: The balance sheet formula showing that total assets always equal capital plus total liabilities ($\text{Assets} = \text{Capital} + \text{Liabilities}$).

• Assets: Resources owned or controlled by a business as a result of past events, expected to bring future economic benefits.

• Non-current Assets: Long-term resources acquired for use within the business to help generate revenue, held for more than 12 months and not intended for resale (e.g., premises, machinery, vehicles).

• Current Assets: Short-term resources that are cash, expected to be converted into cash, or consumed within 12 months (e.g., inventory, trade receivables, bank balance).

• Liabilities: Financial obligations or debts arising from past events, the settlement of which will require an outflow of resources.

• Non-current Liabilities: Obligations that are not due for repayment within the next 12 months (e.g., long-term bank loans, mortgages).

• Current Liabilities: Short-term debts due to be settled within 12 months (e.g., trade payables, bank overdrafts, accrued expenses).

• Capital (Owner’s Equity): The total value of resources contributed to the business by the owner, representing the owner’s claim against the assets of the business.

• Drawings: Cash or goods taken out of the business by the owner for personal use, which reduces total capital.

• Accounting Equation: The balance sheet formula showing that total assets always equal capital plus total liabilities ($\text{Assets} = \text{Capital} + \text{Liabilities}$).

• Assets: Resources owned or controlled by a business as a result of past events, expected to bring future economic benefits.

• Non-current Assets: Long-term resources acquired for use within the business to help generate revenue, held for more than 12 months and not intended for resale (e.g., premises, machinery, vehicles).

• Current Assets: Short-term resources that are cash, expected to be converted into cash, or consumed within 12 months (e.g., inventory, trade receivables, bank balance).

• Liabilities: Financial obligations or debts arising from past events, the settlement of which will require an outflow of resources.

• Non-current Liabilities: Obligations that are not due for repayment within the next 12 months (e.g., long-term bank loans, mortgages).

• Current Liabilities: Short-term debts due to be settled within 12 months (e.g., trade payables, bank overdrafts, accrued expenses).

• Capital (Owner’s Equity): The total value of resources contributed to the business by the owner, representing the owner’s claim against the assets of the business.

• Drawings: Cash or goods taken out of the business by the owner for personal use, which reduces total capital.

• Accounting Equation: The balance sheet formula showing that total assets always equal capital plus total liabilities ($\text{Assets} = \text{Capital} + \text{Liabilities}$).

• Assets: Resources owned or controlled by a business as a result of past events, expected to bring future economic benefits.

• Non-current Assets: Long-term resources acquired for use within the business to help generate revenue, held for more than 12 months and not intended for resale (e.g., premises, machinery, vehicles).

• Current Assets: Short-term resources that are cash, expected to be converted into cash, or consumed within 12 months (e.g., inventory, trade receivables, bank balance).

• Liabilities: Financial obligations or debts arising from past events, the settlement of which will require an outflow of resources.

• Non-current Liabilities: Obligations that are not due for repayment within the next 12 months (e.g., long-term bank loans, mortgages).

• Current Liabilities: Short-term debts due to be settled within 12 months (e.g., trade payables, bank overdrafts, accrued expenses).

• Capital (Owner’s Equity): The total value of resources contributed to the business by the owner, representing the owner’s claim against the assets of the business.

• Drawings: Cash or goods taken out of the business by the owner for personal use, which reduces total capital.