Professional Documents
Culture Documents
Tells us if a
How much the
business is
business is
making a profit
or a loss worth
Everything the
The amount of Every thing the business owes
money supplied by business owns
the owner
The accounting equation
es As
i se
i lit ts
iab =
A
- L Ca
ts pi
s e ta
l+
As Li
= ab
t al ili
a pi tie
C s
C + L
Assets consist of property of all kinds, such as
buildings, machinery, equipment, stock. Other assets
include debts people owe to the business.
Assets
Cash at bank 60,000
Capital 60,000
Mr Black buys a small shop for 32,000, paying by cheque.
Assets
Cash at bank 28,000
Shop 32,000
60,000
Capital 60,000
Mr Black buys some stock for 7,000 and agrees to pay the supplier in
two weeks. Mr Black is called a creditor
Assets
Cash at bank 28,000
Shop 32,000
Inventory 7,000
67,000
Capital 60,000
Mr Black sells some inventory for 600, but Mr Black will collect the
money later. This is known as a debtor
Assets
Cash at bank 28,000
Shop 32,000
Inventory 6,400
Account receivable 600
Capital 60,000
Mr Black sells some inventory for 400, and receives the payment
instantly.
Assets
Cash at bank 28,400
Shop 32,000
Inventory 6,000
Account receivable 600
Capital 60,000
Mr Black pays a cheque for 3,000 for the inventory he bought the
other week.
Assets
Cash at bank 25,400
Shop 32,000
Inventory 6,000
Account receivable 600
Capital 60,000
Mr Black receives payment of 200.
Assets
Cash at bank 25,600
Shop 32,000
Inventory 6,000
Account receivable 400
Capital 60,000
Work Sheet