commerce

• Assets = Liabilities + Owners Equity

  • A resource that a business owns or controls with the expectations that it will provide future benefits, even if they're not fully paid for.
• Non-current asset; Assets that are expected to be of use for more than a year (eg. land, machinery)
• Current asset; Assets that are expected to be converted into cash within one year (inventory, trade receivables)
• Total Liabilities = Non-current Liabilities + Current Liabilities

  • A business's legal debts or money owning that arise during the course of business operations
• Current liabilities; Liabilities that are due for full repayment in the near future (eg. trade payables, bank overdraft)
• Non-current Liabilities; Liabilities that are not due for full repayment in the near future (eg. mortgage, long-term bank loans)
• Equity (Capital) = Assets - Liabilities

  • The owner's investment in the business
• Accounting; the process of identifying, measuring, and communicating financial information about an entity to interested parties so they can make informed decisions
• Revenue; the income that a business receives from selling its products or services.
• Expenses; the economic costs of a business.
• Cost of Goods Sold (COGS); the direct costs of producing the goods sold. (COGS = Opening inventory + Purchases - Closing inventory)
• Profit; when the amount of revenue is greater than the expenses
• Loss; when the expenses are greater than the revenue
• Income Statement; Shows the income (revenue) and expenses of a business over a certain period of time.
• Service business; provides intangible products (eg. banking)
• Trading business; sells physical products through shop outlets (eg. retail stores)
• Owner's Equity = initial capital invested - amount put into the business by the owner (capital) + net profit - drawings