01 05

CAPITAL Accounting LIABILITIES

Owner's investment in a business to start.

TERMS
can be Money, Equipment or vehicles. Debts owed to other people/businesses.
Must be paid back.
02
Long-Term Current
OWNERS EQUITY Debts must be paid over 1
Payable over 1 year.
year or shorter.
Total invest the owner has in the business. i.e Bond on building/house
Mostly 30days.
It will increase with profit/decrease with loss. (Payable over 20years)
Credit/Creditor
03
06
SOLE TRADER
Entrepreneur - only owner/manager (Sole proprietor.)
Income & Expenses
Simplest & most inexpensive ownership.
Income Expenses
Sole trader is personally responsible for business
debts & entitled to all profits. Money generated by business. Costs of running the business.
Also takes all the risk. some will be used to pay expenses I.e.: Rent, Elec, stationery, water
Mostly informal sector - Start this way & grows & some will be profit Expenses have no lasting value -
money is spent on something that
Earned by selling goods or services
is used up.
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07
ASSETS
Items that owned by business that can convert to cash. Profit & Loss
Current Fixed Profit Loss

Short term asset. Long-term value. Money left after all expenses have Happens when expenses are higher than
Can be converted Used to create profits. been paid. income.
to cash in 1 year. wont be converted to Sole trader is responsible for all losses.
Sole trade can have all profits.
i.e. debtors, stock, cash with in 1 year. Owners Equity decreases has losses increases.
Owner's Equity Increase as profits does.
bank account... i.e. buildings, machines,
laptops, printers.....
 08 12
BANKING/TRANSACTIONS Accounting SUBSIDIARY JOURNAL
A business must have their own bank account. Source documents are summarized in it.
Keep finances separate from the owner's. Can be in the form of book or spreadsheets.

TERMS
Transaction is a term for dealing in business. Totals are then posted to general Ledger
Incoming money = Deposits. Outgoing = payments/withdrawals. J & CRJ
le of CP CPJ
amp CRJ
ex
09 See Cash Payments Journal Cash Receipts Journal
Records all payments Records all Receipts
DEBITS & CREDITS
Accounting uses a double entry - means each
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transaction has equal debit to credits.
Debits on Left Credits on right ACCOUNTING EQUATION
10 ASSETS = OWNER'S EQUITY + LIABILITIES
Cash Receipts sl73
of
le on Equation is always valid - No Matter the business.
Source Document - starts transaction. examp ncepts Balance is maintained because each transaction affect
k
When sales happens - customer gets receipt as proof of sale. chec unting co
Acc
o at least 2 accounts.
Receipts must show:
Receipt Number
i.e. - Owner invest R 100 & borrows R100. This should
Details of Goods/Services sold equal value of assets. That means assets must = R200.
Transaction date
Name of the business
Amount Paid
11 07
CASH PAYMENTS Profit & Loss
Business can pay in many ways - cash, eft, cheque. Profit Loss
Each payment must have invoice or cheque stub or
eft proof. With following details: Happens when expenses are higher than
Money left after all expenses have
Transaction date income.
been paid.
Amount paid Sole trader is responsible for all losses.
Sole trade can have all profits.
Cheque or eft number (invoice number) Owners Equity decreases has losses increases.
Name of who is getting paid Owner's Equity Increase as profits does.
Details of what is purpose of payment