Accounting term 1

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Assets

Items of value owned by the business

Liabilities

Amounts owed by a business to external parties

Owners equity

The difference between the assets and liabilities of a business and equals the amount of the owners interest or investment in the business

Revenue

Income derived from the activities of the business

Expense

Costs incurred by the business in earning revenue

Accounts receivable

Any outside parties owed to the business

Accounts payable

Amounts the business oweds to external parties

Bank overdraft

When the business withdraws more money than they have

Unlimited liability

There is no limit the amount of owners private possessions that may be sold to pay debts of the business

Accounting entity assumption

Regards the business as separate and distinct from the owner

Legal entity

Regards the business and owner as the same

First objective

To provide information for decision making. Decisions concerning the efficient acquisition and allocation of economic resources

Second objective

To assist in discharging accountability. Responsibility to
provide information to enable users
to make informed judgements.

Third objective

Help evaluate performance. Evaluation of the performance of management in using resources efficiently, earning profits and achieving financial stability. The performance of individuals and groups within organisation evaluated by management or external users.

Definition of gst

The goods and service tax is a broad based tax of 10 percent on the supple of most goods and services consumed in Australia.

GST clearing

Most cases liability

GST collected

Liability account and credit nature

GST credits received

Negative liability and debit nature