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Accounting Concepts
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What is the term used to refer to the debt of a business?
Liability
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What effect does the following transaction have on the accounting equation: The owner invests R50.000 in the business.
Assets (Bank) increase by R50.000 and Owner's Equity increases by R50.000
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Is this form of the accounting equation correct? A + L = OE
No (A = L + OE therefore we can say A - L = OE)
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What is the simple formula to calculate Profit or Loss?
Income - Expenses = Profit/Loss
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What effect does the following transaction have on the accounting equation: Received money for work done, R5.000
Assets (Bank) increase by R5.000 and Owner's Equity increases by R5.000
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Capital - Drawings + Profit - Loss = ?
Owner's Equity
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What effect does the following transaction have on the accounting equation: Bought equipment for car, R20.000
Assets (Equipment) increase by R20.000 and Assets decrease by R20.000 (Bank)
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Give one example of a current asset.
Answers will vary.
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What is the accounting equation?
A = L + OE
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Give 1 example of an income.
Answers will vary.
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Give 3 examples of expenses
Answers will vary
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What am I referring to when I speak about the revenue of the business?
Income
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What is money in the bank classified as? a)Income b) Liability c) Asset
c) Asset
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What type of business are we dealing with when only one person owns it?
Sole trader
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Salaries (from a business perspective) is an example of a) Liability b) Income c) Expense
C) Expense
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Give 1 example of a fixed asset.
Answers will vary
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Clients who owe the business money are an example of a) Income b) Asset c) Liability
b) Asset
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What effect does the following transaction have on the Accounting Equation: Bought coffee and tea for the staff, R200
Assets decrease (Bank) R200 and Owner's Equity decreases R200
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What is the term for when the owner takes money out of the business?
Drawings
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What effect does the following transaction have on the accounting equation: Take a loan from the bank to buy a delivery vehicle, R100.000
Assets (Vehicles) increase by R100.000 and Liabilities (Bank loan) increase by R100.000
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