Various Accounting terms

3. Dr ACCOUNT
Cr
is a
summarised record
of related
transactions at one
place under a
particular head

4. is the amount
invested by the owner in
the business. It may be
brought in the form of
money or assets having a
monetary value

5. means money or
goods withdrawn from the
business for personal use. It
reduces the capital invested in
the business. Examples
payment of life insurance
premium , payment of income
tax etc.

6. are obligations or debts
that an enterprise has to pay at some
time in the future, i.e. it is the amount
owed by the business
Non-Current Liabilities
Current Liabilities
External Liabilities
Internal Liabilities

7. are valuable
resources owned by a
business which are acquired
at a measurable money cost
FICTITIOUS
ASSETS
TANGIBLE
ASSETS
INTANGIBLE
ASSETS
NON-
CURRENT
ASSETS
CURRENT
ASSETS

8. refers to
the amounts
received or
receivable by
business
organisation from
selling assets, goods
or service

9. refers to the amount
spent or liability for acquiring assets ,
goods or services.

10. Income is the excess
of revenue over
expenses
Loss is the excess of
total expenses over
total revenue
Gain is a monetary benefits, profit
or advantage that arises from
transactions, which are incidental
to business

11. PURCHASES refer to
the amount of goods
bought by a business
for resale or for use
the production
PURCHASES RETURN
means when goods are
returned to the seller
because these are not
according to
specification or have
some defects

12. SALES : refers to the amount of
goods sold that are already
or manufactured by the business.
The term sales is associated with
sale of goods that are dealt with
the firm. It includes both cash and
credit sales.
SALES RETURN: when goods are
returned by the purchaser due to
some reason, then it is termed as
Sales Return

13. Goodsrefers to the product in
which the business unit is
dealing , i.e. goods means all
the items which are
purchased and sold in the
ordinary course of business.
These are purchased for
resale as it is or after
processing .

14. Stock/Inventory refers to the
goods held by a business for sale
in the ordinary course of business
or for consumption in the
production of goods or services
for sale. Stock can be opening as
well as closing.
STOCK
RAW MATERIAL
STOCK-IN-TRADE
SEMI-FINISHED FINISHED GOODS

15. SOLD GOOD
PAYMENT MADE
SITUATION 1

16. SOLD GOOD
SITUATION 2
DEBTORS
FIRM B
(ASSETS)
CREDITORS
FIRM A
(LIABILTY)
PAYMENT MADE

17. is a person or a firm to
whom goods have been sold or
services rendered on credit and
payment has not been received .
Debtors are assets for the firm
is a person or a firm
from whom goods have been
purchased on credit and
payment has not been made.
Creditors are liabilities of the
firm

18. SOLD GOOD
SITUATION 3
BILLS
RECEIVABLES
(ASSET)
BILLS
PAYABLES
(LIABILITY)
DRAWER DRAWEE
Bills
Receivables
(ASSETS)
Bills Payables
(LIABILTY)
PAYMENT MADE

19. BILLS
RECEIVABLES
A Bill of Exchange is drawn by
the seller on the buyer, in which
the seller directs the buyer to
pay the specified amount at a
specific future date . Such bill
becomes Bills Receivables for
the seller after getting the
acceptance
BILLS
PAYABLES
It refers to a Bills of
Exchange accepted by the
person who has purchased
goods on credit

21. is a
documentary evidence in
support of a business
transaction. For example
Cash Memo, Invoice,
Receipts, etc

22. Discount is any type of
reduction in the price by the
seller to the buyer. It may be of
two types:
Trade Discount
Cash Discount