02 - Accounting Flashcards
What does a Balance Sheet contain?
Assets
Equity
Liability
What are Assets?
Vermögenswerte/ Anlagen
Resources Available to the business
e.g.: Land, Building and raw materials owned by the business
What are Liabilities?
Verbindlichkeit/ Haftung
Legally binding obligations of the business
e.g. Bank loan and sales tax (VAT) payable by the business
What is Equity?
Eigenkapital
owner´s stake in the company
What is the Accounting Equation?
The difference between the value of Assests and Liabilities of the business is Equity.
Equity is the residual claim (=Restforderung) after liabilities have been satisfied
EQ = A - L
Alternatively:
Assets = Liability + Equity
What are the different kinds of Measurement?
1.
2.
3.
4.
- historical cost (original amount paid as agreed)
- fair value (current price market)
- profit (normal business transactions, e.g. supplying goods and services to customers
- loss (when the revenue derived from selling products is less than expenses incurred to make them)
What does NOT have an Impact on Profit and Loss statement?
1.
2.
- capital contributed
- capital withdrawn
What DOES have an impact on the Profit and Loss statement?
1.
2.
- earning revenues
- incurring expenses
The Equity may be increased by…
1.
2.
- new capital or resources contributed by the owners to the business (invest cash in the business)
- earning revenue
The Equity may be decreased by…
1.
2.
- capital or resources withdrawn by the owner from the business (withdraw cash from the business)
- incurring expenses
What is the Revenue?
1.
2.
- increase in the equity
- e.g. providing a service to a customer for which payment is made
What are Expenses?
- decrease in equity
- e.g. cost of providing a service to a cusotmer
How do we calculate the profit?
Revenue minus Expenses
