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Accounting Theory
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This is a really great, short summary of all the things one might need to know before starting basic accounting. These notes also make for a great memory refresher!
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By: correiabeth2002 • 2 year ago
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AccountingTheory
Important Concepts:
Concept: Explanation: Examples:
Gives the net worth of the
business (how much the
business is worth after all
Owner’s Equity Capital
the assets and liabilities
have been taken into
account)
Possessions of a business Land
Tangible/Fixed that are intended to be Buildings
Assets kept for a time period Vehicles
longer than 12 moths Equipment
Assets owned by the
Fixed Deposits
Financial Assets business that should
Share
hopefully bring income
Trading
Possessions of a business
inventory (stock
that are intended to be
Current Assets or goods)
kept for a time period
Trade and other
shorter than 12 moths
receivables
1
, (debtors)
Cash (cash float;
petty cash or
cash in the
businesses bank
account
The debt that a business Creditors
Liabilities has incurred and is Term Loans
therefore liable to repay Mortgage Bonds
Current Income
(from services
rendered)
Rental Income
When a business receives
Discount
Income money for services
Received
rendered or goods sold
Profit
Interest Income
Commission
Received
Rental Expense
Water &
Electricity
Wages
The money paid for a
Stationery
Expenses service rendered to the
Insurance
business
Telephone
Salaries
Advertising
Repairs
When the owner of a
business withdraws funds
Drawings or assets, it will reduce the
owner’s share in the
business
Money or assets given by
Capital the owner, in order to
start a business
Increase the owner’s
Profits
interest in the business
2
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