FUN PACK 4

Question 1

Define assets

Answer 1

Resources owned by a business to generate revenue. e.g. cash at bank, office equipment.

Question 2

Define liabilities

Answer 2

Obligations owed by a business to third parties e.g. trade payables.

Question 3

Define equity

Answer 3

Owner’s claim on the business assets.

Question 4

Define working capital

Answer 4

Excess of current assets over current liabilities.

They are the available resources for short term operation after paying off short term debts.

Question 5

Define capital expenditure and revenue expenditure

Answer 5

Capital expenditure are outlays on items which benefit the business current and future accounting periods while revenue expenditure are outlays on items which benefit the business the next twelve months or less.

Question 6

Define depreciation

Answer 6

Allocation of the cost of the non-current asset over its useful life

Question 7

Define credit transaction

Answer 7

Events where the payment for the events is made in the future.

Question 8

Define trade receivables

Answer 8

Debts owed by credit customers.

Question 9

Define trade discount.

Answer 9

Allowance off the list price of goods.

Question 10

Define accrued expense.

Answer 10

Expenses due but not paid.