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SingaporeAccounting

The Accounting Environment and Equation

4 dot points across 4 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

How do we sort the things a business owns and owes into the right groups?

Classify items as assets, liabilities or owner's equity, and split assets and liabilities into current and non-current
A simple answer to the N(A)-Level Principles of Accounts outcome on classifying items. What counts as an asset, a liability or owner's equity, and how to split each into current and non-current for the financial statements.
9 min answer →

What is a sole trader, and how is it different from other ways of owning a business?

Describe the sole trader and distinguish it from a partnership and a company
A simple answer to the N(A)-Level Principles of Accounts outcome on forms of business. What a sole trader is, the idea of the business as separate from the owner, and how a sole trader compares with a partnership and a company.
8 min answer →

Why do businesses keep accounts, and who relies on the information they produce?

Explain the purpose of accounting and identify the main users of accounting information
A simple answer to the N(A)-Level Principles of Accounts outcome on why businesses keep accounts. The purpose of accounting, the difference between bookkeeping and accounting, and the internal and external users who rely on the information.
8 min answer →

How does the accounting equation always stay balanced after every transaction?

State and apply the accounting equation: assets equal liabilities plus owner's equity
A simple answer to the N(A)-Level Principles of Accounts outcome on the accounting equation. The equation assets equal liabilities plus owner's equity, the dual effect of transactions, and how the equation stays in balance after each one.
9 min answer →