what is trade recievables
money owed to the business from sales made but not yet payed for
what is trade payables
money the business owes from supplies purchased but not yet payed for
state the 5 purposes of accounting
managment of business
measuring performance
recording transactions
compliance
control
define capital income
long term sources of income used to fund the purchase of non current assets
define revenue income
income that comes into a business from its trading activities
types of capital income
loans, morgages, shares, owners capital, debentures
what is shares
investments that provide income through dividends and potential profit when sold at a higher price
whats a debenture
a type of loan that is issued by another business
types of revenue income
cash sales
credit sales
rent recieved
commision recieved
intrest recieved
discount recieved
capital expenditure meaning
spending on items that will stay in the business for more than a year
what is revenue expenditure
day to day spending to fund the trading activities of the business e.g. inventory
internal sources of finance
retained profit
net current assets
sale of assets
retained profit advantage and disadvantage
advantage-no interest charges
disadvantage-once used is not available for alternative purpouses
net current assets advantage and disadvantage
a-encorages the business to manage cash flow effectively
d-lower stock holdings can affect the firms ability to meet customer needs
sale of assets advantage and disadvantage
a- no interest charges
d-can increase costs in the long run if an asset needs to be leased back
what is retained profit
profit( sales revenue-total cost) kept in business to fund future expenditure
net current assets is
current assets are items of value owned by a business that will be used and change in value within a year
net current assets=current assets-current liabilits
sale of assets is
selling an item of worth owned by a business in order to achieve an immediete cash injection
