Business Basics Topic
Accounting Terms and Parts of a Cheque
- Read notes
- Flashcards
- Quiz
- Confident
Study focus - 3 things
- Accounting terms help track money coming in, money going out, and what a business owns or owes
- A cheque is a written instruction to a bank to pay money to a named person or business
- Every cheque part matters because missing details can make the cheque invalid
Section 1Basic accounting terms
Income is money received. Expense is money spent. Profit is what remains when income is greater than expenses. Loss happens when expenses are greater than income.
Section 2Assets and liabilities
An asset is something valuable owned by a business, such as equipment, cash, or stock. A liability is money the business owes, such as a loan. Easy to mix up - assets help the business; liabilities must be paid.
Section 3What a cheque does
A cheque tells the bank to pay money from the drawer's account to the payee. Cheques are less common now than electronic payments, but they still appear in business exams.
Section 4Parts of a cheque
Important parts include date, payee, amount in words, amount in figures, drawer's signature, bank name, cheque number, and account details. Watch out: the amount in words and figures should match.
Examples
A patty shop receives $20,000 in sales and spends $14,000 on supplies and wages. What is the profit?
Profit = income - expenses = $20,000 - $14,000 = $6,000.
On a cheque, the name 'N. Brown' is written after 'Pay'. What part of the cheque is N. Brown?
N. Brown is the payee because that is the person who should receive the money.
Now let's water it
Session runs notes to flashcards to quiz back-to-back.