Basic Terms used in Accounting

Financial Statements

There are two basic financial statements which are prepared by an enterprise:

  1. Profit & Loss Statement, and
  2. Balance Sheet

Accounting Equation

The three components of a balance sheet can be stated in the form of following basic accounting equation

Assets = Liabilities + Capital (owners equity)
eg: R50,000=R10,000+R40,000

This equation tells at a glance thatContinue reading