Accounting chapter 01

What is bookkeeping?
Book-keeping is a process of detailed recording of all the financial transactions of a business.

What is accounting ?
Accounting is using book-keeping records to prepare financial statements and to assist in
decision-making.

A statement of financial position shows the assets , equity & liabilities of a business on a certain
date.

What are assets ?

Resources owned by the business

capital/equity
The share that belongs to the owner. Ex - anything the owner gives is called CAPITAL

Liabilities ?
Debts or payables of a business

What is the accounting equation

ASSETS = EQUITY + LIABILITY
Who are trade payable ?
Credit suppliers / creditors

Trade receivables?
Credit customer , who must pay us