Topic 2 - Financial Literacy - Accounting Concepts

What is a sole trader?

A business owned by one person, who usually manages it too.

What is a debit?

The left hand side of the ledger account.

What is a credit?

The right hand side of the ledger account.

What is capital?

Money or property invested in a business to start it.

What is owner's equity?

The owner's monetary interest in the business.

What is income?

Money earned by the business from selling products or services.

What are expenses?

Costs incurred by the business to operate.

What is profit?

When income is more than expenses.

What is a loss?

When expenses are more than income.

What are transactions?

Occurrences recorded in the journals of an enterprise.

What are liabilities?

Money the business owes to others, e.g., a bank loan.

What are assets?

Property owned by a business that can be converted to cash.

What are cash receipts?

All amounts of money received and deposited in the business's bank account.

What are cash payments?

Cheques drawn on a business's current bank account.

What are subsidiary journals?

Journals for recording different transactions before entering the General Ledger.

What is the accounting equation?

Assets (A) = Owner's equity (OE) + Liabilities (L).

What is an asset?

Possessions of the business.

What is a bank overdraft?

A liability where the bank allows withdrawal beyond the account balance.

What are debtors?

Amounts due to the business from customers.

What are creditors?

Amounts the business owes to suppliers.

What is a cash payment journal?

A special journal that records all cash payments.

What are advertisements classified as?

Expense.

What are vehicles classified as?

Asset.

What is insurance classified as?

Expense.

What is rent income classified as?

Income.

What are salaries classified as?

Expense.

What is stationery classified as?

Expense.

What is capital classified as?

Owner's account.

What is cash float classified as?

Asset.

What are consumable goods classified as?

Expense.