Accounting Flashcards
What are current assets?
Current assets are assets that a business will own for less than one year
What is the accounting equation?
The accounting equation is a way for a business to find out a business’s Owners Equity (OE), Assets (A), and Liabilities (L).
A = OE + L
What are non-current assets?
Non-current assets are assets that a business will own for more than one year.
What is Capital or Owner’s Equity?
The initial investment the owner will make in their business in the form of money or assets.
What are assets?
Assets are a business’s possessions that they own.
What are liabilities?
A liability is a financial obligation or debt that a business owes to others. E.g. a loan
What is a balance sheet?
A balance sheet is a financial document that shows what a company owns (assets), what it owes (liabilities), and the value left for owners (equity) at a specific time.
What are accounts receivable?
Account receivable refers to the money that customers owe a business for goods or services that have been delivered but not yet paid for.
What are accounts payable?
Accounts payable is the money that a business owes to for example a wholesaler, who has given them the products, but the business needs to pay them back.
What is bank overdraft?
Bank overdraft is a credit facility that allows you to withdraw more money from your bank account than you have, up to an agreed limit, usually with heavy interest or fees if not paid back on time.
What are drawings?
Drawings are the withdrawals from a business an owner or partners will take out for their own personal use, reducing the business’s equity or capital. These are recorded in financial statements.
What is an income statement?
An income statement is a record of a business’s incomes and expenses for the year, which is totally to find out if the business had a profit or loss that year.
What is revenue?
Revenue is the total income generated by a business from its normal operations, usually through the sale of goods or services.
What are expenses?
Expenses are the costs incurred by a business to generate revenue or maintain operations.
What is a non-current liability?
A liability that stays with the business for more than one year.
