Chapter 3 - Elements Of FS Flashcards
What is the accounting equation?
Total assets = Total liabilities + Total equity
Name the category that the following element belongs to:
Fixtures & fittings
Non-current asset
Name the category that the following element belongs to:
Furniture
Non-current asset
Name the category that the following element belongs to:
Trade receivables
Current asset
Name the category that the following element belongs to:
Inventory
Current asset
How would a furniture shop record its tables and chairs for sale?
Inventory
Name the category that the following element belongs to:
Cash at bank
Current asset
Name the category that the following element belongs to:
Prepaid expense
Current asset
Name the category that the following element belongs to:
Property
Non current asset
Name the category that the following element belongs to:
Accrued expense
Current liability
Name the category that the following element belongs to:
Trade payables
Current liability
Name the category that the following element belongs to:
Discount received
Income
Name the category that the following element belongs to:
Long term borrowing
Non current liability
Name the category that the following element belongs to:
Bank overdraft
Current liability
Define an asset.
Resources owned or controlled by the business to carry out its business activities.
Expected to generate future benefits.
Define liabilities.
Amounts that the business owes to other businesses or people.
How is an asset different from an expense?
The classification depends on the benefits that can be enjoyed by the business. Benefits from assets will last longer than benefits from expenses.
What is the expanded accounting equation for a sole proprietorship?
Total assets = Total liabilities + Capital + Income - Expenses - Drawings
