Key definitions

Question 1

Expenses

Answer 1

all the money spent to run the business

Question 2

Assets

Answer 2

anything that is owned by a person or a company that can be turned into cash

Question 3

Drawing

Answer 3

when the owner withdraws cash/goods for personal use

Question 4

Liabilities

Answer 4

a business’s financial responsibilities, money owed to the suppliers

Question 5

Income

Answer 5

money received/earned

Question 6

Capital

Answer 6

the owner funding personal cash into the business

Question 7

trade payable

Answer 7

the money your company owes to someone (tends to be from your purchases bought on credit)

Question 8

trade receivable

Answer 8

the money your customer owes you (tends to be from their purchases bought on credit)

Question 9

depreciation

Answer 9

the overall loss of the value of an object

Question 10

Irrecoverable debts

Answer 10

when a company decided the specific huge debts you owe them are never going to be payed off (bad debts)

Question 11

Income statement

Answer 11

a report made by a company which manages profits and losses

Question 12

statement of financial position

Answer 12

reports of assets and liabilities e.g balance sheets