Academy Of Accounting

1. Assets
Assets are resources owned by a business that have economic value and can provide future benefits.
Examples: cash, buildings, equipment, inventory.

2. Liability
Liabilities are obligations or debts that a business owes to others and must pay in the future.
Examples: loans, accounts payable, salaries owed.

3. Cash
Cash refers to money that is readily available for use in a business. It includes physical money and money in bank accounts.

4. Rent
Rent is the amount paid by a business for the use of property, such as office space or equipment. It is usually treated as an expense.

5. Bank
Bank in accounting refers to the financial institution where a business keeps its money or the account used to record transactions involving deposits and withdrawals.

6. Receipt
A receipt is a written or electronic document that proves a payment has been made or money has been received.
Here are three more important accounting terms added to your list:

7. Capital
Capital is the amount of money or resources invested by the owner into the business. It represents the owner’s interest in the business.

8. Revenue
Revenue is the income a business earns from its normal activities, such as selling goods or providing services.

9. Expenses
Expenses are the costs incurred by a business in order to operate and generate revenue.
Examples: rent, salaries, electricity, transportation.

Academy Of Accounting
Colombo

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Income Statement (Profit & Loss Statement) 📊
An income statement shows how much a business earned, spent, and made (or lost) over a specific period (month, quarter, or year).
What it tells you
Is the business profitable or not?
Where is the money coming from?
Where is the money going?
Basic Format
Copy code

Revenue (Sales)
– Cost of Goods Sold (COGS)
= Gross Profit

– Operating Expenses
= Operating Profit

– Interest & Taxes
= Net Profit (or Net Loss)
Key Components (Simple)
Revenue – Money from sales or services
COGS – Direct cost of producing goods/services
Gross Profit – Revenue − COGS
Operating Expenses – Rent, salaries, utilities, marketing, etc.
Net Profit – Final profit after all expenses and taxes
Example
Revenue: 1,000,000
COGS: 400,000
Gross Profit: 600,000
Expenses: 350,000
Net Profit: 250,000 ✅
Why it’s important
Helps in decision-making
Used by investors & banks
Essential for tax calculation
Shows business performance

Academy of Accounting

IGCSE&OL Accounting
IAL Accounting

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