The Elements of Accounting

Assets
All the resources which are owned and controlled by the business are called Assets.
They give future economic benefit to the business, that is they help the business earn income.

Examples:
  1. Buildings
  2. Machinery
  3. Motor Vehicles
  4. Furniture and Equipment
  5. Cash in Hand
  6. Cash in Bank
  7. Stock (Inventory): the goods which are bought with the intention of selling to the customers
  8. Debtors (Trade Receivers): the people to whom the business has sold goods on credit and will receive money for them at a later date
Liabilities
It is the obligation a business has to outsiders.  It is the money which the business owes to outsiders.

Examples:
  1. Bank loan: this is where money is borrowed from the bank and will be paid back later
  2. Creditors (Trade Payables): the people from whom a business buys goods on credit and will have to pay back in a later date.
Capital
The amount of resources invested by the owner is called capital.  It is what the business owes to the owner in case of business closing down.