Accountancy hitch for a software engg.

Question

I am a s/w engg. I am preparing an accounting software. What I need to know is that :

Let us think a small business does not have any assets like land, building, goodwill .... (the business running in a small house taken on rent) ...It only does some trading business ... buying goods from some one and selling it to others...

Then what will be the net Capital of the business..... ?

What i think is :

Capital = Stock Cash at hand cash at bank debtor - creditor

is this all right ? I have very limited idea on Accountancy .. so please explain in 'lay man's term' .

This s/w is for my uncle who is just transferring this business from old day business ( copying transaction into hardbound copies to computer accounting)

Thanks in Advance

Answer 1

Consult Uncle's or Yours Chartered Accountant.

Answer 2

Assets= Capital + Liabilities

In simple terms, whatever money was introduced by the owner of the business,(the capital,) plus any monies it owes (its liabilities) must equal youre Fixed Assets(Premises, Plant & machinery, Fixtures & fittings, vehicles) and youre current assets(Stock, debtors, Cash at Bank, Cash in hand)  

Answer 3

Your business is small and does not have assets like land etc...

Then Net Capital would be:

Actually Net capital is What you have invested some money to run the business. Since you have mentioned that yours is a small business you must have invested some for example Rs.50,000 for running your business. some amount of initial investment in the business is called as capital.

Stock is your inventory that is where stock is converted into goods or products and sold in the market.

Cash in Hand is how much does a business  has currently where it can be utilized for the future purpose.

Debtor is the amount where for example if your the owner of the business, so where you have given some amount as credit to some other person or a company.

Creditor is a company or a person who has given you credit for your business.

I think you can just surf the net which can be helpful for you. It gives good amount of examples along with required amount of data.