FFA Revision Questions Flashcards
W1 T1
What’s an Asset?
An asset is a resource with economic value that an individual, a company, or a country owns or controls with the expectation that it will provide a future benefit.
What’re the types of Aseets?
Current Assets and Non-current Assets
What’s a Current Asset?
Current assets are short-term economic resources that are expected to be converted into cash or consumed within one year
What’s a Non-current Asset?
Non-current assets are resources with an expected life of greater than a year, such as plants, equipment, and building
What’s a liability?
A liability is something that a person or company owes, usually a sum of money
What’re the two types of liabities?
Current liabilities and non-current liabilities.
What’s a current liability?
Liabilities that are expected to be paid below 12 months.
What’s a non-current liability?
Liabilities that are expected to be paid in 12 months or more.
What’s Equity?
Equity is the value of a company’s assets minus its liabilities, or the shareholders’ stake in the company.
What does Equity represent?
It represents the residual value of a business.
What’s Income?
Income is the money you receive in exchange for your labour or goods
What’s Expenses?
An expense is the cost of operations that a company incurs to generate revenue.
What’s the Accruals concept?
When revenue earned and expenses incurred are entered into the company’s journal regardless of when money exchanges hands.
What’s the Going Concern Concept?
An accounting term for a company that has the resources needed to continue operating indefinitely until it provides evidence to the contrary.
What’s the Separate Entity Concept?
This concept treats a business as an entity distinct from its owners or other businesses
What’s the Historical Cost concept?
The value of an asset on the balance sheet is recorded at its original cost when it’s acquired by the company
What does DEAD CLIC stand for?
Debit
- Expenses
- Assets
- Drawings
Credit
- Liabilities
- Income
- Capital
What’s the accounting equation?
Assets - Liabilities = Equity (Capital)
