Accounting

Summary and Self-test

Summary
Current liabilities
Overdraft
Liabilities Payables
Tax
Non-current liabilities
Loans
Current assets
Cash
Assets Inventory
Non-current assets
Receivables
Land and buildings
Vehicles
Plant and machinery
Capital introduced
Fixtures and fittings
+ Profits
Capital
Losses
Drawings

Business entity concept

Accounting equation

Assets = Capital + Liabilities

Accruals concept

Credit transactions

Sales Purchases Payables Receivables

Income statement Balance sheet

Sales X Non-current assets X

Purchases (X) Current assets X
Gross profit X Total assets X
Expenses (X)
Other income X Capital introduced X

Net profit X Net profit X

Drawings (X)
Closing capital X
Non-current liabilities X
Current liabilities X
Total capital and
liabilities X

46 The Institute of Chartered Accountants in England and Wales, March 2009