Elements Flashcards
What is meant by the term ‘Asset’?
Resources owned by the business
Increases the value of a firm
Can be exchanged for economic benefits such as money
Increasing: Debit
What is meant by the term ‘Liability’?
A company financial debt or obligation
Money owed for assets supplied to the business
Settled over time through the transfer of economic benefits such as money, goods or services
Increasing: Credit
What is meant by the term ‘Equity’?
The difference between what your business is worth and what you owe (Assets - Liabilities)
The amount of the funds contributed by the owners (shareholders)
Increasing: Credit
What is meant by the term ‘Income’?
Money that a business receives in exchange for providing a good or service
Sales, earnings or gross profit (total revenue minus cost of goods sold)
Increasing: Debit
What is meant by the term ‘Expenses’?
Cost of operating the business
Money spent or cost incurred in an organisations efforts to generate revenue
Examples: wages, salaries
Increasing: Credit
