Basic terminology of Accounting
Business: In general, by the word 'business' we mean all those human activities that are made for money acquisition.
For example, to create various types of goods in factories, to produce grains by farmers
1.Assets: Property refers to the economic source of business which can be expressed in currency, which is valued and used for business operations and earning income. In this way we can say that properties are the resources that benefit in the future.
For example, machines, land, buildings, trucks, etc.
There are two types of assets -
- Fixed Assets: Fixed asset is assets which are kept for a long time, fixed assets are used for business and the normal process of operation is not redistributed.
Examples- land, buildings, machinery, machinery, furniture
- Current Assets: Current Assets are Assets, which are kept for a short time, are being redistributed in the normal process of operation of Current Assets.
Examples- Debtors, prepaid expenses, stocks, receivables, etc.
2. Liabilities (liability): In addition to the owner's wealth, the financial liability of business is called liability. That is, the money which business ventures have to give to others, is called liability, so there are liabilities liabilities in it, these are all amounts, which are payable to future creditors.
Examples- creditor, payable bills, loans and overdrafts etc.
3. Capital (capital): That money is called capital, which the business owner imposes in business. Business is started from this amount.
4. Goods:All such things are included under Goods, which are bought for sale again.Often goods which the merchant buys or sells.
Examples- raw materials, manufactured goods or services.
5. Sales (sales):A process of sales or sales marketing in which a product or service is given as a return to money or any other item. Sales can be of two types.
a.Cash sales (cash sales)
b.Credit sales (credit sales)
6. Revenue:This business is the amount of money earned from the sale of its products or by providing services to the customers. These are called sales revenues. There are other revenue items and general resources for businesses, sales, fees, commissions, interest, dividends, royalties, fare to be received etc.
7. Expense:Expenditure is the cost of the goods and services used for realization of income. These are those which are expended in the process of earning from a business. Generally, the expense is measured by the consumption of assets or the cost of services used during any accounting period.
Examples: - Advertising expenses, commissions, depreciation, rent, salaries, valuables, rentals, wages, salaries, interest telephone etc.
8. Expenditure:This is the amount of resources consumed. Usually it is of long-term nature. That is why it is beneficial to get it in the future.
9. Income (income): The remainder which is left over after deducting expenditure from the earnings is called income. Business activities or other activities increase the income of an organization's net worth. Income is a comprehensive term that includes profit.
Income = earnings - expenditure
10. Profit:Profit During the accounting year, the growth of income is more than the expenditure. It increases the owner's equity.
11. Gain:Gain During a period of time, there is a change in the nature of the goods in the equity (equity) and place and the change in the assets being held in the holdings. It can be either one or both of the nature of the capitol nature or revenues.
12. Turnover:In a given period, total sales are called turnover by combining both the hair and credit cells.
13. Proprietor:The person investing the capital in the business is known as the proprietor of that business. It is authorized to get the full benefit of the business. He carries risks in doing business and is also liable for his losses.
14. Drawings:The amount of money that the business owner spends or removes from the business for his personal expenditure is called a drawback, as if someone has filled the fees for his children's school fees, it is called a withdrawal. It is not said that it is the amount of cash or other assets that the owner extends for personal use.
15. Purchase:Merchandise purchased for sale is called the loan, it can be done in a way that can be borrowed.
Example - If a trader of clothes has bought a cloth, it is called purchasing but the furniture purchased for decoration can not be bought.
There are two types of purchases
a.Cash buy (cash purchase)
b.Credit purchase (borrowing purchase)
16. Stock:This is the scale of things like merchandise, spares and other items available under a business. It is also called closing stock. Under any business, the amount of stock on head goods is not sold, which is not sold until the balance sheet is prepared. It is also called closing stock (ending inventory). This raw material, half-finished goods and fully-finished goods are included in closing stock under any manufacturing company, which is available at closing date. Similarly, the amount of stock in the beginning of accounting year (accounting year) is called opening stock (initial inventory).
17.Creditor:The person from whom we buy the borrowed goods, we call the creditor.
18.Debtor:The person whom we sell lending goods, we call it Debtors.
19. Discount:This is a type of concession provided by the trader to his customers.
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