3.3 Double-Entry Bookkeeping

Question 1

What is an Asset?

Answer 1

• Anything owned by the business

Question 2

What is a Current Asset?

Answer 2

• Assets that are expected to have value to the business for one year
• Eg: Cash, Stock, Trade Receivables

Question 3

What is a Non-Current Asset?

Answer 3

• Assets the are expected to have value to the business for more than one year
• Eg: Vehicles, Offices, Fixtures and Fittings

Question 4

What is a Liability?

Answer 4

Anything that is owed by the business ( a debt)

Question 5

What is a Current Liability?

Answer 5

• A debt that must be paid to creditors within one year
• Eg: Bank Overdraft, Short Term Loan,Trade Payables

Question 6

What is a Non-Current Liability?

Answer 6

• A debt that isn’t expected to be settled to creditors within one year
• Eg: Long Term Loan, Car Loan, Mortgage

Question 7

What is a Running Cost (Expense)?

Answer 7

• Costs involved in the running of the business
• Eg: Purchases, Rent, Sundry Expenses

Question 8

What is Income?

Answer 8

• Money the business receives
• Eg: Sales Revenue, Capital, Rent Receivable, Discount Received