Describe the following basic accounting terms 1.Accounting methods 2.Account receivable 3.Account payable 4.Capital 5.Cash flow statement 6.Credit and debit 7.Double-entry bookkeeping

      

Describe the following basic accounting terms 1.Accounting methods 2.Account receivable 3.Account payable 4.Capital 5.Cash flow statement 6.Credit and debit 7.Double-entry bookkeeping

  

Answers


KevinNyabute
Accounting methods: Companies choose between two methods—cash accounting or accrual accounting. Under cash basis accounting, preferred by small businesses, all revenues and expenditures at the time when payments are actually received or sent are recorded. Under accrual basis accounting, income is recorded when earned and expenses are recorded when incurred.

Account receivable: The sum of money owed by your customers after goods or services have been delivered and/or used.

Account payable: The amount of money you owe creditors, suppliers, etc., in return for goods and/or services they have delivered. For example, cash, inventory, and accounts receivable (see above). Fixed assets (non-current) may provide benefits to a company for more than one year—for example, land and machinery.

Capital: A financial asset and its value, such as cash and goods. Working capital is current assets minus current liabilities.

Cash flow statement: The cash flow statement of a business shows the balance between the amount of cash earned and the cash expenditure incurred.

Credit and debit: A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is entered on the right in an accounting entry. A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is entered on the left in an accounting entry.

Double-entry bookkeeping: Under double-entry bookkeeping, every transaction is recorded in at least two accounts—as a credit in one account and as a debit in another. For example, an automobile repair shop that collects Rs. 10,000 in cash from a customer enters this amount in the revenue credit side and also in the cash debit side. If the customer had been given credit, “account receivable
kevinnyabute answered the question on March 5, 2018 at 07:08


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