Background of Organization

Pizzeria, an Italian restaurant mainly serving pizza is solely owned by Dahlia who was a
chef in her previous job. Pizzeria offers a broad range of Italian cuisine from pasta to pizza
which is Dahlia’s main specialty. She started this business using her own savings as a
professional chef and an additional loan she took to purchase restaurant equipment to prepare,
cook and store foods. Her restaurant is located in a strategic location which is in the center of
the hustle-bustle city, Kota Kinabalu. They are also attracting lots of customers as there are
shopping malls and other premises nearby. Dahlia’s original mission leading towards opening a
pizza eatery is to serve the most satisfying local handmade pizza in town. Although there are
other famous pizza restaurant franchises, she is determined to compete with them and offer
customers a distinct taste of warm pizza dough using her skilled knowledge and experience in
this field.
Classification of Possible Business Items

Assets Liabilities Drawing Capital Revenues Expenses

i) Assets

Assets is an economic resources which are owned by a business and is expected to be benefit
in the future. There are two types of assets which are non-current assets and current assets.
Non-current assets are assets which are purchased for retention by a business to generate
income for the purpose of providing service to the business and not held for resale. Meanwhile
assets are items owned by business with intention of turning them into cash.

ii) Liabilities

Liabilities represents debt or amounts owed by a business. It is settled over time using
economical transfer through money. There are two types of liabilities such as long term or non-
current liabilities or current liabilities. Long term liabilities are debts which are not payable
withing the short for example long-term loans, premises mortgage and debentures. Current
liabilities are debts of the business that must be paid within a fairly short period of time. For
example, short-term loans, bank overdraft, creditors or account payable. Account payable is a
person to whom money is owed for good or services. Accounts receivable is a person who owes
money to the business for goods or services supplied to him.

iii) Drawings

Drawings are cash or goods out of a business by the owner for his personal use. Any money or
goods taken out of the business by the owner for his personal use will decrease capital.

iv) Capital

Cash or assets is known as capital or owner’s equity brought in by the owner for the investment
in his business. Is it considered as lent to the business by the owner or the amount owed by the
business to the owner. The capital may be increased when further amount of capital is put in
and the business producing profit. Meanwhile the capital may decrease when the owner
withdraws money or stock of goods from the business which is then known as drawings and
when the business is making losses.
v) Revenues

Revenues is when gross increase in capital resulting from business activities entered into for
the purpose of earning income. Monetary value of goods and service supplied to the customers.
For examples sales of goods or service, fees, commission received, dividend received, rental
income and interest received.

vi) Expenses

Expenses are costs incurred by the business in the course of trading or providing services or
costs of operating the business (OPEX). Examples of expenses are rent expense, repairs,
electricity and accountancy fees.