POA STUDYING Flashcards
what is accounting
It’s the language of business.
its is the way that people communicate using accounting phares and documents.
what is the formula for accounts
asset= capital+Liability
capital= asset- liability
liability= asset- capital
what is an asset
an asset is anything value that is owed by an individual or a business.
what are the 2 types of assets
fixed and currents asset
what is a fixed asset
a fixed asset is to help the business run they are not bought for resale
examples of fixed assets
land, building, furniture etc.
what are current assets
they are the asset the business intends to convert into cash
examples of current assents
inventory / stock, cash at bank, debtors
what are current liability
short term debt that our firm must pay less than 12 months
examples of current liability
creditors, bank over draft, accured
what are long term liability
debts our firm must pay in 12 months
example of long term liability
bank loans, mortgage
what is capital
cash or other assets invested into a business.
what is purchase account
it is use when our firm buys goods by cash, cheque or on credit
what is sale account
it is use when our firm sells goods by cash, cheque or on credit
what should happen to the purchase account
it must be debited and the other account credited.
what should happen to the sales account
it must be credited and the other account must be debited
what is return outwards account
it is when our firm returns goods to the supplier because the goods either been spoiled, damage
what should happen to the returns outward account
must be entered on the credit side and the other account on the debit side
what is return inwards account
it is when the customer has returned goods back to our firm either because the goods were damaged or spoiled.
what should happen to the returns inward account
must be entered on the debit side and the other account credit side
what is drawing account
when the proprietor removes money out of the business for her/his uses
what is a revenue
these are sums of money received by our firm.
examples of revenues
rent receivable, commisions receivable, bad debt recover,discount receivable
what are expenses
bills are firm must pay
what is a personal account
an account that is named after a person or a firm
who are debtors
debtors are people who owe us sums of money
who are creditors
creditor are people who we owe sums of money to
how can you tell when some one is a debtor
by looking at a personal account and the b/d is on the debit side
how can you tell when some one is a creditor
by looking at a personal account and the b/d is on the credit side
what is a trial balance
It’s a financel statment use to check arithmitcal accurcy of double entry records
what is an income statement
what is a balance sheet
financal statement that is use to show value at a spacific time and point
what is carriage inwards
when our firm buys goods and have to pay for transportation for the goods to be delivered
gross profit
this is profit before bills have been paid
what is net profit
this is profit after all expenses have been paid
what does ledgers contain
T.Accounts
what does journals contain
list and expantory notes
sale ledger
contains all the accounts of persons and firms that our business sells goods on credit
purchase ledger
contain all the accounts of person and business that our firm purchases goods from on credit
cash book
a special ledger that contains both cash and bank
general ledger
contains all other accounts Like:
purchase account, revenue account, etc
