ems accounting

sole trader

a business owned and run by one person

capital

an amount put into a business to help it operate

owner's equity

the owners share of a business after debts are paid

asset

something a business owns that has value

liability

money a business owed and would have to pay over time

expense

necessary payments to keep a business running

income

money earned from selling goods/providing services

profit

when a business earns more than it spends

drawing

when a business owner takes money out of the business for personal use

loss

when a business spends more than it earns

transaction

exchange of money/goods between parties

current account

a bank account for daily business or personal transactions

source document

a paper that shows a transaction happened

deposit slip

a form used to put money into a bank account

receipt

proof a payment was received

till slip

record of sales from a cash register

cheque

written order to a bank account to pay someone money

bank statement

summary of all transactions in a bank account

cash invoice

document showing goods/services sold and payment received in cash

EFT payment

money sent electronically from one bank account to another

accounting equation

asset = owners equity + liability

cash journal

used to record daily transactions of a business

cash receipts journal

to record all cash received

cash payment journal

to record all cash payments

subsidiary journals

cash receipts journal and cash payments journal

accounting cycle

transaction takes place → recorded on source document → recorded in subsidiary journal → recorded in general ledger → balances taken to trial balance → used to create income statement and balance sheet