ACCOUNTING NOTES
BASIC PRINCIPLE OF ACCOUNTING
1. ASSETS
It is something that the business owns or can sell for money
Non –current assets
These assets are meant to be stored for a long period of time, i.e a year or more.
They are dividing into two categories:
Tangible/ fixed assets: These are physical resources that can to be touched. They are used to
manage the business, for example: land and building/ premises, vehicle, equipment, machinery.
Financial assets: This means investing in a financial institution for a year or more to earn interest.
Example: fixed deposit
Current assets
The value of these assets is constantly changing. For example, it is money or can be quickly
converted into money. For example
Inventories: Trading stock consumable stores on hand
Raw material stock finished goods stock
Work in process/ progress stock
Trade & other receivables: Trade debtors ( less provision for bad debts)
Expenses prepaid
Income accrued/ receivables
SARS (income tax) if tax was overpaid ( New)
Cash and cash equivalents: Savings account bank Petty cash, cash float fixed deposit
(If maturing in next 12 months)
2. LIABILITY
One business owes money to another
These are two categories of liabilities
NON-Current liabilities
These loans will not be repaid within the next 12 months. For examples: bonus and
mortgage bonds.
Current liabilities
1
BASIC PRINCIPLE OF ACCOUNTING
1. ASSETS
It is something that the business owns or can sell for money
Non –current assets
These assets are meant to be stored for a long period of time, i.e a year or more.
They are dividing into two categories:
Tangible/ fixed assets: These are physical resources that can to be touched. They are used to
manage the business, for example: land and building/ premises, vehicle, equipment, machinery.
Financial assets: This means investing in a financial institution for a year or more to earn interest.
Example: fixed deposit
Current assets
The value of these assets is constantly changing. For example, it is money or can be quickly
converted into money. For example
Inventories: Trading stock consumable stores on hand
Raw material stock finished goods stock
Work in process/ progress stock
Trade & other receivables: Trade debtors ( less provision for bad debts)
Expenses prepaid
Income accrued/ receivables
SARS (income tax) if tax was overpaid ( New)
Cash and cash equivalents: Savings account bank Petty cash, cash float fixed deposit
(If maturing in next 12 months)
2. LIABILITY
One business owes money to another
These are two categories of liabilities
NON-Current liabilities
These loans will not be repaid within the next 12 months. For examples: bonus and
mortgage bonds.
Current liabilities
1
