Accounting Elements

Question 1

ASSETS

Answer 1

Assets are resources owned by the business to generate income.

Question 2

Current assets

Answer 2

Resources owned by the business which are easily convertible to cash and are expected to be used up within a year.

Question 3

Trade receivables

Answer 3

Amounts owed by debtors (credit customers) to whom the business sells goods on credit.

Question 4

Inventory

Answer 4

Goods held for resale.

Question 5

Non-current assets

Answer 5

Resources owned by the business which expected to last for more than one year and are not easily convertible to cash.

Question 6

LIABILITIES

Answer 6

Amounts that the business owe to others.

Question 7

Current liabilities

Answer 7

Debts owed by the business which have to be paid within a year.

Question 8

Trade payable

Answer 8

Amount owed to creditors (credit suppliers) by the business for buying goods on credit.

Question 9

Other payable

Answer 9

Amounts owed to creditors (credit suppliers) by the business for reasons other than buying goods on credit.

Question 10

Bank overdraft

Answer 10

Money owed to the bank when the bank account is drawn out more than what it has.

Question 11

Non-current liabilities

Answer 11

Debts owed by the business which have repayment period of more than a year.

Question 12

Long-term borrowing

Answer 12

Money borrowed to be repaid over more than a year.

Question 13

OWNER’S EQUITY

Answer 13

Owner’s contribution and the profit generated by business.

Question 14

Capital

Answer 14

Resources contributed by the owner to the business

Question 15

Drawings

Answer 15

Assets taken from a business by its owner for personal use

Question 16

Income

Answer 16

Amount of money that the business earns.

Question 17

Expense

Answer 17

Amount of money that the business spends to operate the business.