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Chapter 1: Accounting Equation - Coggle Diagram
Chapter 1: Accounting Equation
What is Accounting?
It is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users or information.
Bookkeeping VS Accounting
Bookkeeping is part of accounting but only concerns in recording the transactions.
Users of Accounting Information
Creditors
Debtors
Investors
Owners
Government
Bank
Accounting Equation
ASSETS = CAPITAL + LIABILITIES
Assets
Non-Current Assets
Fixed Assets that can be used for more than 1 year
Current Assets
Assets that can be quickly converted into cash
Liabilities
Non-Current Liability
Liabilities that take more than 1 year to be settled
Current Liability
Liabilities that take less than 1 year to be settled
Capital
Owner's contribution to the business.
Sales
Income that the business has earned
Expenses
Money spent to generate revenue
Profit
financial benefits gained from the business activities