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13 Cards in this Set
- Front
- Back
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Define Seperate Entity Convention
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In Ltd companies the law recognises the individual as being seperate from the business, not so in sole trading and partnerships
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Accounting Equation
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Assets = Liabilities + Capital
Assets of business = Liabilities of business |
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Define Asset
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Resorce which may be used to generate revenue in the future
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Define Receivable
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Person owing money to an entity
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Define Liability
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Obligation to pay money as a result of a transaction
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Define Payable
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Person to whome money is owed due to a service or goods being received
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Balance sheet Includes (3)
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Assets, liabilities & capital
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Gross profit
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Sales revenue - cost of goods sold
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Net profit
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Gross profit - all other expenses
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Income statement layout
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Sales
Less: cost of goods sold Equals gross profit Less: expenses Equals Net profit |
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To calculate cost of goods sold
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Cost of opening inventories + Cost of purchases during the period, Less cost of closing inventories
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Capital transactions
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- Affect organisation in the long term
- Expenditure and disposal of non-current assets - Obtaining and repayment of non-current finance - Initially affect the fingures on the balance sheet |
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Revenue transactions
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- affect organisation in the current period
- include sales, running costs etc - Affect figures in the income statement |
