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 non-current assets?
A long-term asset that a business expects to keep for more than a year.
What are current assets?
Short-term assets that can be easily converted into cash within a year.
What are liabilities?
The amount that a 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 a business owes, which can be paid more than a year later.
What are current liabilities?
The amount that a 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?
Money taken out of the business for the owner’s personal use.
What are expenses?
The costs of running a business on a day to day basis.
What is income?
The amount the business earns from selling goods or services.
What is the formula for 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.
