The basic accounting equation is Assets = Liabilities + Equity.
Define revenue in accounting.
Revenue refers to the income earned by a business through its main activities such as sales of goods or services.
What is the purpose of a trial balance?
The purpose of a trial balance is to ensure that the total debits and total credits in the accounting system are equal, and to identify any errors that may have occurred during the recording process.
Explain the concept of depreciation.
Depreciation is the systematic allocation of the cost of a non-current asset over its useful life to reflect its gradual loss in value.
What are the three main financial statements in accounting?
The three main financial statements in accounting are the income statement, balance sheet, and cash flow statement.
Define accruals in accounting.
Accruals refer to revenues and expenses that have been earned or incurred, but their cash payments or receipts have not yet occurred.
What is the difference between a trading account and a profit and loss account?
A trading account records the results of buying and selling goods, while a profit and loss account summarizes all the revenues and expenses of a business to calculate its net profit or loss.
Explain the concept of bad debts.
Bad debts are customer debts that are considered uncollectible and are written off as expenses in the accounting records.
What is the purpose of a cash flow statement?
The purpose of a cash flow statement is to provide information about the cash inflows and outflows of a business during a specific period of time.
Define the term 'inventory' in accounting.
Inventory refers to the goods and materials held by a business for sale or production.
Explain the concept of trade payables.
Trade payables are the amounts owed by a business to its suppliers for the purchase of goods or services on credit.
What is the purpose of a balance sheet?
The purpose of a balance sheet is to provide a snapshot of the financial position of a business at a specific point in time, showing its assets, liabilities, and equity.
Define the term 'capital' in accounting.
Capital refers to the financial resources or funds contributed by the owner(s) to start and operate a business.
Explain the concept of double-entry bookkeeping.
Double-entry bookkeeping is a system of accounting that records every financial transaction with equal debits and credits to maintain the balance in the accounting equation.
What is the purpose of an income statement?
The purpose of an income statement is to show a business's revenues, expenses, and net income or loss over a specific period of time.
What is the basic accounting equation?
The basic accounting equation is Assets = Liabilities + Equity.
Define revenue in accounting.
Revenue refers to the income earned by a business through its main activities such as sales of goods or services.
What is the purpose of a trial balance?
The purpose of a trial balance is to ensure that the total debits and total credits in the accounting system are equal, and to identify any errors that may have occurred during the recording process.
Explain the concept of depreciation.
Depreciation is the systematic allocation of the cost of a non-current asset over its useful life to reflect its gradual loss in value.
What are the three main financial statements in accounting?
The three main financial statements in accounting are the income statement, balance sheet, and cash flow statement.
Define accruals in accounting.
Accruals refer to revenues and expenses that have been earned or incurred, but their cash payments or receipts have not yet occurred.
What is the difference between a trading account and a profit and loss account?
A trading account records the results of buying and selling goods, while a profit and loss account summarizes all the revenues and expenses of a business to calculate its net profit or loss.
Explain the concept of bad debts.
Bad debts are customer debts that are considered uncollectible and are written off as expenses in the accounting records.
What is the purpose of a cash flow statement?
The purpose of a cash flow statement is to provide information about the cash inflows and outflows of a business during a specific period of time.
Define the term 'inventory' in accounting.
Inventory refers to the goods and materials held by a business for sale or production.
Explain the concept of trade payables.
Trade payables are the amounts owed by a business to its suppliers for the purchase of goods or services on credit.
What is the purpose of a balance sheet?
The purpose of a balance sheet is to provide a snapshot of the financial position of a business at a specific point in time, showing its assets, liabilities, and equity.
Define the term 'capital' in accounting.
Capital refers to the financial resources or funds contributed by the owner(s) to start and operate a business.
Explain the concept of double-entry bookkeeping.
Double-entry bookkeeping is a system of accounting that records every financial transaction with equal debits and credits to maintain the balance in the accounting equation.
What is the purpose of an income statement?
The purpose of an income statement is to show a business's revenues, expenses, and net income or loss over a specific period of time.