Accounting Flashcards
What is a sole trader?
A form of business where only one person owns the business and usually runs the business too.
Name the 2 types of business.
Services business: where businesses provide a service in exchange for payment.
Trading business: Where goods are sold to customers in exchange for payment.
Define “capital”.
The money used to start a business by the owner.
Define “owner’s equity”.
The owner’s contribution to the business and how much the business is worth.
What are assets?
Money or anything that you own that can be turned into money, including loans and other payments owed to you. Something of value that is durable, and is kept for a long time, that the business owns.
What are fixed assets?
Their value doesn’t change much over a short period of time and is expected to last for a long time. Not bought/sold regularly. For example, land & buildings, vehicles, and equipment.
What are current assets?
Assets kept for less than 12 months. For example, the money in the bak, cash float, trading stock, money owed to the business by debtors, etc.
Define “income”.
Money earned/received by a business.
Define “expenses”.
The daily running costs of the business.
Define “profit”.
The amount of money left over after all the expenses have been paid.
Define “liability”.
Money owed to a person/business/bank.
Define “drawings”.
What the owner takes out the business for personal use.
What is a transaction?
A business deal.
Define “source document”.
The first document on which a transaction is recorded.
Name the 2 types of income.
- Current income.
2. Rent income.
Name the 2 types of liabilities.
- Non-current liabilities.
2. Current liabilities.
The Double Entry System:
For each transaction, we will have a ________ and a _________ account.
- Debit.
2. Credit.
What is the accounting equation?
Assets = Owner’s Equity + Liabilitrs.
OR
Owner’s Equity = Assets - Liabilities.
OR
Capital + Income - Drawings - Expenses.
List all the steps in the accounting cycle.
- Transaction.
- Source document.
- Summarised in journals.
- Totalled and posted to the general ledger.
- Trial balance.
- Financial statemnets.
Name the 4 types of source documents.
- Receipt.
- Deposit slip.
- Cash register Tape (CRT)
- Cash invoice.
Define “cheque counterfoil”.
A summary of the details of the cheque. An important source document used for recording transactions,
Cash journals:
Cash _________ Journal (CRJ) in which all cash recieved are recorded.
Cash __________ Journal (CPJ) in which all cash payments are recorded.
- Receipts.
2. Payments.
In T accounts, Assets get bigger on the _________ side and smaller on the _______ side. Owners’ equity gets smaller on the _________ side and bigger on the ________ side.
- Debit.
- Credit.
- Credit.
- Debit.
