Double entry Flashcards
What is an asset?
Things that the business owns.
What are the 2 types of assets?
Non-current assets and current assets.
What are the features of non-current assets?
Will be used by the business to help make a profit
Not intended for re-sale
Intended to be in use for more than a year
What are current assets?
Short term assets that the business will keep for less than a year, and are easily convertible into cash.
What are liabilities?
The amount that the business owes to a bank or other organisation.
What are the 2 types of liabilities?
Non-current liabilities and current liabilities.
What are non-current liabilities?
The amount that the business owes, where the repayment date is more than a year in the future.
What are current liabilities?
The amount that the business owes that must be repaid within a year.
What is capital?
The amount of money invested in the business by the owner.
What are drawings?
When the owner takes money out of the business for their own personal use.
What are expenses?
The costs of running the business on a day to day basis.
What is income?
The amount the business earns from selling goods or services.
How to calculate sales revenue?
Quantity sold x selling price.
What are returns inwards (sales returns)?
When goods sold on credit are returned by the customer to the business.
What are returns outwards (purchases returns)?
When goods bought on credit are returned by the business to the supplier.
