Studying principles of accounts can be very easy once you learn which items are Assets, Liabilities, Capital, Income and Expenses. The accounts that fall under these 5 headings are used throughout your POA course. You can even associate the ALICE accounts with action words, you OWN assets, OWE liabilities, EARN income, INVEST capital and SPEND on expenses.
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ALICE accounts list
ASSETS – Own
Goodwill – you own the reputation of the business
Land – you own the space on which your business runs
Building – you own the structure in which your business runs
Fixtures and Fittings – you own the items that make your building functional
Equipment/Machinery/Tools – you own the items that allow your business to operate
Motor vehicles – you own the items that allow you to transport goods in and out of your business
![ALICE Accounts](https://i0.wp.com/www.studyzoneinstitute.com/wp-content/uploads/2022/06/ALICE_Accounts_Landscape_Study_Zone_Institute_Poster.jpg?resize=618%2C477&ssl=1)
Prepaid expense – you own the light, rented space or repairs of machinery for a period that you paid for in advance
Accounts receivable – you own the money for which you have invoiced persons or businesses for goods, services or assets sold on credit
Debtors – you own the money that customers owe you for goods and services sold on credit
Bank – you own the money in your bank account
Cash – you own the money in your hand
LIABILITIES – Owe
Bank loan – you owe the bank money that you borrowed
Debenture loan – you owe the bank money that you borrowed while you run a limited liability company
Investor’s loan – you owe a person or business who invested money into your business
Mortgage – you owe the bank money for property or land to pay back over a long period
Hire purchase – you owe a store money for fixed assets to pay back in installments over an agreed period
Prepaid revenue – you owe your customers the goods and services that they paid for in advance
Accounts payable – you owe persons or businesses for goods, services or assets for which you have been invoiced that you purchased on credit
Creditors – you owe money to suppliers for goods you have purchased on credit for resale
Bank overdraft – you owe the bank money because you withdrew more than you had in your account
Cash dividends – you owe shareholders money that they invested into your business
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INCOME – Earn
Cash sales – you earn cash money for goods or services sold to customers
Credit sales – you earn money for goods or services sold to customers but they owe you for it
Revenue – you earn money for goods or services sold to customers both cash and credit
Discount received – you earn money that you saved after purchasing products or services at a lower cost
Returns outwards – you earn money that you get back from a supplier after returning goods that you purchased
Bad debts recovered – you earn money that you have written off as bad debts in a past period
![Online Accounting Software for Small Businesses, FreshBooks](https://i0.wp.com/www.studyzoneinstitute.com/wp-content/uploads/2022/11/Screenshot-2022-11-08-091839.jpg?resize=618%2C286&ssl=1)
Other names for money earned in the ALICE accounts are:
Earnings
Benefits
Proceeds
Takings
Yield
Commission
CAPITAL – Invest
Cash at start
Owner’s investment
Money out of pocket
Partners’ investment
Share capital
Members’ contribution
Total assets minus total liabilities
Equity
Drawings – owner withdraws money from the business for personal use
EXPENSE – Spend
Cash purchases – you spend cash money on goods for resale from suppliers
Credit purchases – you spend money on goods for resale from suppliers but you owe them for it
Carriage inwards – you spend money to transport goods for resale from suppliers into your business
Carriage outwards – you spend money to transport goods for resale to customers out of your business
Discount allowed – you spend money when you allow customers to pay a lower price for your product
Returns inwards – you spend money when customers bring back goods that you sold them and you refund the money you earned
![ALICE Accounts](https://i0.wp.com/www.studyzoneinstitute.com/wp-content/uploads/2022/06/ALICE_Accounts_Study_Zone_Institute_Poster.jpg?resize=618%2C800&ssl=1)
Rent – you spend money when you pay a landlord for space to run your business for a period
Repairs – you spend money to fix assets that you use to run your business
Utilities – you spend money on light, internet, phone and water used to run your business
Salaries and wages – you spend money on labour provided by your staff
Insurance – you spend money for protection of a possible eventuality such as fire, flood or accident
Tax – you spend money on a mandatory contribution to state revenue
ALICE accounts and transactions
It is important to know the ALICE accounts for recording transactions. Read about Debit and Credit of T accounts and Increase and Decrease of ALICE accounts. Note that all Assets and Expenses have debit balances and all Liabilities, Capital and Expenses have credit balances.
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