EMS

• Business entity


  Businesses are known as business entities, an entity can exist independently
• Business entity rule


  The personal money matters of the owner of the business must be kept separate from the money matters of the business
• Asset


  Property that belongs to an enterprise or person, which was obtained through a purchase or exchange transaction
• Assets


  • land and buildings, vehicles, computers, cash float
• Fixed asset


  Property with a long life expectancy (more than 1 year), not bought to be resold for a profit, used by the business
• Fixed assets


  • vehicles, land and buildings, equipment
• Financial assets/Investments


  Represents money invested at financial institutions or money invested in shares
• Current asset


  An asset that consists of cash or can be converted into cash within one year
• Current assets


  • trading stock, money in the bank, cash float
• Liabilities


  An amount that the enterprise owes another enterprise or person, excluding money owed to the owner
• Liabilities


  • loans and bank overdraft
• Long term liability


  Liabilities that will become payable after a period of one year
• Long term liabilities


  • loans and mortgage
• Current liability


  A liability that will become payable within the period of one year, also known as a short-term liability
• Current liabilities


  • bank overdraft and trading creditors
• Capital


  The amount the owner invests in the business, does not need to consist of money only (can contribute assets)
• Drawings


  The owner takes money or anything else from the business for his personal use
• Income


  Represents the amount that was received by the business for rendering a service, increases the profit of the business, which increases OE in the enterprise
• Expense


  A payment for services and consumable stock that is needed for making trading possible, decreases the value of OE, seen as an incurring of costs for the purpose of generating an income
• Transaction


  An activity in the business where the money value must be recorded into the books of the enterprise at a specific time
• Cash receipt


  Represented by a transaction where money is received by the enterprise
• Payment


  Represented by a transaction where money is paid out by the enterprise, normally by internet payment (EFT)
• Profit and Loss

  Profit: income is more than expenses, Loss: expenses are more than income, Profit is the difference between income and expenses
• Owner's equity


  The total value of the owners investment in the business, the owner of the business receives the net profit of the business, any profit made is added to OE and any loss is deducted from OE, owner draws money for personal use it is also deducted from OE
• Source document


  Each transaction that takes place must be recorded on a document, the information on the document includes: the date, amount, person involved and reason for the transaction
• Bank


  The current/cheque account in the books of the enterprise
• Cash float


  Money that is kept in the cash register from which customers are given change
• Petty cash


  A specific amount in cash kept for making small payments that do not justify the use of an EFT