Flashcards

Basics of Double Entry

Adam T Bookkeeping UK CAT English 7 cards

Cards in this deck (7)

1What are the two classifications of INCOME in double entry bookkeeping?Business income is classified as being either capital income or revenue income.
2What is the definition of CAPITAL INCOME?Capital income is income borrowed by the business. Such income is used to finance the setting-up of and expansion of the business. It includes capital invested by the owner(s) and funds borrowed from other persons or organisations.
3What is the definition of REVENUE INCOME?Revenue income is income earned by the business from its trading or non-trading activities.
4What are the two classifications of EXPENDITURE in double entry bookkeeping?Business expenditure is classified as being either capital expenditure or revenue expenditure.
5What is the definition of CAPITAL EXPENDITURE?Capital expenditure is expenditure which has a long-term effect on the profit making capacity of the business. It includes payments made to buy fixed assets, as well as payments made to install, modify and improve fixed assets.
6What is the definition of REVENUE EXPENDITURE?Revenue expenditure is expenditure which has short-term effect on the profit making capacity of the business. It includes payments made for goods for resale, business expenses like rent, insurance, heating, vehicle running costs and repair/maintenance of fixed assets.
7An example of business income and expenditure.