Current assets are assets that can change considerable in value, whereas fixed assets are items of fixed value that depreciate over a certain period. Any money that is used to start your business is classified as the Capital of the business. The Capital, profit and owner s wages is called the Owner s Equity. Liabilities include any amount owing to another business or corporation. If your bank balance is in overdraft, it means that you owe your bank and therefor your bank account will qualify as a liability.
Tax owing to the taxman and money paid to the taxman are liabilities.
The total of all sales constitutes income. The Gross Profit is the difference between Income and Expense. If the Expenses are more than the Income, then it is called a Gross Loss. In future articles we will explore different terms used, Assets, Liabilities, Income, Expense, Gross Profit, Net Profit, Trial Balances, Debit and Credits and many other important Accounting information and the different sets of books required in Accountancy. Inc. PageWise makes no representations about the content published on this site.