Purchasing and Financing 2024

Current assets are assets with amounts that changes continually and include.
o Cash (Including money in the bank)
o Accounts receivable
o Inventory
o Raw materials
Investments are securities owned by the business and include stocks and bonds.
Capital assets are permanent things your company owns and include;
o Land
o Buildings
o Equipment
o Vehicles
Computers, furniture and appliances are also capital assets as long as they remain for use
within your business and are not items you sell.
Intangible assets are patents, copyrights and other nonmaterial assets that have value.
Liabilities
Anything a company owes to people or businesses other than its owners is considered a
liability.
Current liabilities generally refer to a liability that must be paid within a year. This
includes bills, money you owe to your vendors and suppliers, employee payroll and shortterm
loans.
Long-term liabilities refer to any debt that extends beyond one year, such as a mortgage.
Owners' Equity
Owners' equity, also called capital, is any debt owed to the business owners. For example,
if you invested R50 000 of your savings to start a business, that amount is recorded in a
capital account, also referred to as an owners'-equity account.
Working capital
Working capital is a measurement of an entity’s current assets, after subtracting its
liabilities. Generally speaking, companies with higher amounts of working capital are
better positioned for success. They have the liquid assets needed to expand their business
operations as desired.
Sometimes, a company will have a large amount of assets, but have very little with which
to build the business and improve processes. This can occur when a company has assets
that are not easy to convert into cash.
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