Please enable JavaScript.
Coggle requires JavaScript to display documents.
ACCOUNTING CLASSIFICATION & ACCOUNTING EQUATION, Owner's Equity…
-
-
-
-
-
OWNER'S EQUITY(Amounts invested by the owner in the business for the acquisition of assets to the business)
- Increase in owner's equity: profit & capital
- Decrease in owner's equity: losses & drawing
-
-
- Asset that were bought not primarily to be sold but to be used in the business.
- Example: Land, building, machinery, furniture, fixtures & fittings.
-
- Value of all assets that are reasonably expected to be converted into cash within one year.
- Example: Bank, debtor, stock/inventory
-
no physical substance for example, patent , trademark,goodwill
Purpose of SOPL
- To determine the gross & net profit / loss of the business.
Purpose of SOFP
- To show the financial position of a business in term of assets, liabilities & capital at the certain date.
-
- Derive from sale of goods
- Derive from performance of services
-
- Amounts of assets (cash/goods/fixed assets) are taken out from the business by the owner for his/her personal use.