Accounting Terminology

Basic Accounting Terminology

1. Capital
(Capital) means that the merchant is from the money put in the business by himself, which we call the register of trade. Merchant refers to the proprietor (proprietor) in solitary trade. While the partnership is from each partner in the work and each shareholder in the company. Profit in business leads to increase in capital and losses and drawings lead to decrease in capital.

Accounting Terminology

2. Drawing 
means the withdrawal of cash from the business for personal work. The use of Goods means the amount and goods taken out of the business by the owner for his personal use. It is called withdrawal.

3. Equities 
Liabilities mean that the right to property or all claims against them is liability. Whether it is from creditors or the owner himself. The liability of creditors in the first case and the liability of the owners in the second case is called.

4. Assets 
Assets means the (present) visible (intangible) rights existing in the business which are of economic value to the owners of the business, ie it is the sources of wealth which provide continuous benefits to the business in future. .

A. Tangible Assets (visual property) 
The assets which have a physical (moot) form and which are seen, touched, identifiable are called visual assets. Such as furniture, machines, buildings, land, motor cars and computers etc.

B. Intangible Assets (Assets) 
Assets that do not have a physical form or basis and cannot be seen, touched, or identified and cannot be bought and sold in the open market are called invisible assets. Such as - Trade Mark fame. (Good Will) Public Rights Rights, Proprietary Rights etc.

C. Current Assets 
Property refers to property that is in business for a short period, ie assets that are converted into cash in a financial year (usually one year). Such as - Receivable Bill Debtors etc. .

D. Fixed Assets: 
Fixed Assets refers to assets that have been purchased for long-term use in the business, ie that increase the profitability of the business. They are called immovable properties.

E. Liquid Assets 
 means assets that can be quickly converted into Cash, Liquid Assets such as - Cash, Bank Balance, Debitor, Receivable Bills ( Bills Reciable B / R) etc. .

F. Wasting Assets: 
Depreciable assets means assets that are depleted after a certain period of time due to their continued use, are called depreciable assets. Such as - mineral and stone mines, oil wells etc.

G. Fictitious Assets 
(fictitious or unrealized assets) are fictitious or unrealized assets that have no value. These only due to their balance (technical form). We show on the property side. In reality, these are not properties and neither are they used nor are there any realizations. . For example, discounted acquisition commission on issue of shares, and Debenture.

5. Liabilities 
Liabilities are the liabilities of the owners of the business and all other financial liabilities. Such as - Bank Overdraft, Out Standing Expenses, Criditor, Capital (Capital)

A. External Liabilities 
Such liabilities (amounts) that the external parties have to pay are called external liabilities. Such as - Creditor loan, unpaid. Out standing expenses.

B. Internal Liabilities 
Internal Liability The profit of the current year (investment) by the owner in the business. Sundry Funds and the undistributed benefits are the remaining internal responsibilities.

C. Current Liabilities 
The public has to pay in a very short period of time. Called short-term liability, Jai Chat becomes within a lacquer. Such as: - Bank Overdraft, Creditors, Outstanding Expenses, Bills Payable etc.

D. Long Term Liablities (long term liabilities) 
obligations that are paid in the long term (long term). It is called long term liability. Dank Loan, Debenture

6. Balance Sheet: 
Letter refers to a statement showing the financial position of a business on a particular date, the Jasmada party, the first liability party and the second property party. External and internal obligations are written on the liability side. While the property side. In movable, immovable, artificial, invisible, decaying and imaginary assets are written sequentially.

7. Cost Price 
Cost refers to the purchase price of a property and all the expenses up to the time of its establishment. It is called the cost, that is, the cost of purchasing the goods or goods and transporting the goods to the warehouse, including all the expenses. The cost of goods and materials will be called price. Cost refers to the expenditure incurred on obtaining goods and services.

8. Book Value 
The amount of property that is shown in the books of accounts and financial statement is called book value.

9. Receivable: 
The amount received from selling an article on sale is called the recovery value when the loss is less than the book value. There are benefits when the recovery value exceeds the book value. Eg: - The book value of an article is Rs. 100. Are. And he gets 150 rupees. If we were sold in this way we would get Rs. 50. Has the benefit of

10. Working capital 
Working capital is called the working capital, ie the capital which is available to carry out the daily tasks of business. That are used in business operations. 180

Working Capital = Current Working = (Current Assets) = (Current Liabilities)

11. Debtor: 
The sources from which money is received in the business are called debtors, or the person or firm and party who owes the business money. The debtors are called - the parties who owe the amount due to them by selling the goods borrowed by the business, the parties are called the business debtors. Due to some other reason, the fees from some services and the rent of property etc. arrears from which sources are received are called other debtors.

12. Creditors: 
Individuals, firms and parties who owe the business money are called creditors, and when a person or party has purchased and borrowed half of the borrowed goods, it will be called a business creditor. And any other reason. For example, if you do not pay the amount spent on getting services, the creditors who will be called other creditors.

13. Revenue 
Income is the internal flow of receipts and cash under normal activities of business, from selling goods of the business, providing services such as interest, commission, commission, brokerage. The rent of the properties is obtained from etc.

A. Income - Income that is derived from the normal business practice will be called income.

B. Capital Income - Income that is made on the sale of the assets of the business and issuing the premiums of the shares.

14. Expenses 
Expense is the cost related to the profits and receivables of the business which reduces the liability of the business owner.

A. Income expenditure - The expenditure that is incurred on the normal operation and activities of a business is called the income expenditure. That is, such expenses, which usually end in a financial year. Such as - wage rent etc.

B. Capital Income - Expenses whose benefits continue for a long time are called capital expenditures. like - .

  • Expenditure on repair of old property.
  • Expenditure on establishment of new permanent property.
  • Expenditure on purchase of new permanent property.
  • Expenditure incurred on increasing work efficiency.
  • Initial expenditure
  • Expenditure incurred on issue of shares and debt papers.

15. Purchase
An item (goods) that has been acquired for the purpose of selling cash or borrowing will be called a purchase. Of goods from the point of view of production. Means purchased goods. That which will be converted or converted into finished goods, whereas goods for a trading unit means that. Is from goods that were bought for the purpose of re-selling. For example, for a motorcar seller, purchasing a motorcar while purchasing its parts (together with which the motorcar will be made) will be called purchasing. Purchase of any item will be considered as purchase only if it is sold for the purpose of making a profit. Example: Buying a computer to sell a computer vendor will be called purchasing. But a motorcar. Purchasing a computer by the seller for his office will not be considered purchase. The purchase of the property of that computer will be considered.

16. Sales
For the purpose of selling, adding a lam to the cost of the goods purchased or the goods produced will be transferred to the other party. The sale or borrowing or cash sale includes domestic and foreign sales. Sale refers to the sale of goods. Not from the sale of property. Example: Selling a computer by a computer vendor would be considered a sale, but selling a computer of his office computer by a motorcar seller would not be considered a sale.

17. Purchase Return
Returning some portion of the total merchandise purchased back to the seller will be called purchase return. The reasons may be: (a) excess supply of goods (b) some part of the goods getting spoiled or loss incurred. (C) Goods not received as ordered. In order to calculate net purchase, the amount of such purchase return is reduced. Total Purchase - Purchsae Return = Net Purchase

18. Sales return
The portion of goods sold that has been returned by the buyer. The sale will be called a refund. Calculate the sales return. Calculate the sales return from tomorrow sales. Net sales come when some sales are subtracted from the amount of sales return.

19. Stock
The quantity of goods or supplies available at a given time is called stock. Stock is a variable current. Is property From the accounting point of view it is necessary to calculate two types of stocks.

 A. Opening Stock (Initial Stock) - On the first day of the account, the available quantity of stock and its cost will be called the initial stock, the initial stock is not to be evaluated separately if the trade is ParanĂ¡ which will be the last stock of the previous year. It will be the initial stock of the current year and there is no initial stock for the new business.

B. Closing Stock (End Stock) - Available in business on the last day of accounting, the unsold stock will be called the last stock. The final stock is always valued on the basis of either the market price or the cost price, whichever is lower. Account On the last day of the day, a detailed stock list is prepared showing the quantity of warehouse goods of the business. And it is evaluated. In this stock list, the goods left on the condition of sale and return or return should be included in the calculation of some stock while the goods sold which were not received by the buyer were not included in the final stock. It should be noted that there are three types of stocks in a manufacturing business.

(a) Stock of Raw Material: - On the last day of the accounting year, the remaining raw materials in Godan which have not been released to the department area for production.

(b) Stock of working progress: - Factories in which the stock lying in the semi-manufactured state during the manufacturing process, which also has some processes to rebuild.

(c) Stock of finished Goods: - Stocks of goods which are already manufactured. And sales. Are ready. Till the last day of the accounting year, the sale of which is in the form of a stock in the warehouse, for a reason.

20. Investment 
when investment is more than required in the business, it is called appropriation of the companies out of business in government IChanntent question papers, permanent deposits bonds etc. Appropriation should be short and long term. The amount can be obtained again by selling them on the basis of appropriation excerpts and question papers, otherwise the amount is received after the expiry of the securities. Interest or dividend is received on these investments. Which is considered the normal income of the business. Income from appropriation operations and non-operating appropriations is called Non-Operating Income (None).

21. Contigent Liabilities
The liability which is or is not related to any future event is called doubtful liability.

Eg - litigation money in the court.
- Guarantee given to someone.
- Bills paid, due next year.

22. Gross Profit
Excess of net sales amount on the cost of goods sold, which does not include administration and sales expenses. Gross Profit = Net Sales Amount - Cost of goods sold

23. Net Profit (Net Profit)
Excess of expenditure on expenditure in a particular accounting period will be called net profit whereas on the contrary, excess of expenditure on income. Will be called loss.

24. Behavior or Soda or Transaction 
When two parties deal with goods in exchange for mudra, then there will be a transaction between those two parties and it is a deal, transaction, transaction for business. The behavior can be both cash and credit. In this way, in practice one party is the recipient, and the other party is the recipient. This practice involves purchase - sale, purchase return, sale return of goods, payment in the case of borrowing, receiving income etc.

25. Event 
Event in Evets accounting work refers to the facts which affect the economic resources of the business, this phenomenon is called. . The event has favorable and unfavorable conditions on the means and object of business, which has nothing to do with the external party. . Such as - business fire, theft etc.

26. Account
Transactions related to any person, thing or income expenditure will be recorded sequentially over a certain period of time.
 Is called an account. Accounts. Accounts are kept in the account book, and its debit and credit have two sides. With the help of the initial sisters, keeping the rules and principles laid down in the ledger, all the transactions of the entire period were sorted. As a rule, we are able to find the result of a particular person, thing or income-expenditure from the account book related to that period. Can.

27. Goods
All such things that a businessman does business. Goods are called, that is, goods that are bought for the purpose of selling will be called goods. For example, if the seller of a motor car transacts a motor car, then it will be called the owner for it. If he buys a computer for office use, then he will not be called a consignment. That is, he will not buy or sell computers. .

28. Journal
Journal is the primary book of accounting. Business transactions are recorded in a journal, chronologically. The businessman first records the transaction in this book.

29. Entry
Entering a physical transaction into a business according to the rules laid down in the initial books of accounts is called an entry.

30. Receipt
The additional money that is received from the best use of capital is called income, and the portion of income that is actually received. It can be of two types.

(A) Capital Receipt
1. Money appropriated by the owner or partners in the business.
2. Secured or Unsecured Loans.
3. Amount received from shares or letters of credit.
4. Amount received from sale of permanent properties.
5. The amount of compensation received for the non-completion of a permanent property contract.
6. The amount of compensation received from the insurance company in case of destruction of permanent property.
7. Interest amount received on issue of shares at the premium.
8. Balance of Ashan's Haran account.

(B) Revenue Income
In this we include those receipts which are obtained through the following means
1. Amount received by the business from selling goods.
2 . Amount received from service delivery, such as the authorization fee received by the author from writing a book, the rent received by the hotel practitioner from the room, the advice fee taken by the lawyer or doctor, the amount received from the supply made to the electricity company, to the municipality. Amount received from local tax etc.
3. Business Activities - Amount received from Kalapo like interest commission discount etc.
4. Compensation received if breach of contract of goods or service.
5. Amount received for giving permanent properties for use.

(31.) Payment
During the operation of business activities, an amount has to be paid in respect of many items. The total amount due is paid out of expenditure and the actual amount paid out of expenses. This too has two types of income.

(A) Capital Payment: In this we include all those payments which are made on the following items. .

1. Any payment which is related to permanent property and which has increased the functioning of that property, the production cost has decreased or the working life has increased.

2. The amount spent for obtaining capital such as legal expenses, brokerage, commission etc.

3. Payment of Preliminary Expenses for the establishment of a new venture.

4. Payments related to relocation expenses to increase earning capacity of the business.

5. Development and research related payment etc.

(B) Revenue Payment - Payment of expenses that were incurred for the execution of business activities in the current year. As follows

1. Purchase and payment of expenditure related to goods.

2 . In the case of a service providing institution, for the purpose of expenditure, such as the payment of expenditure on the purchase of coal etc. by the power generating institute.

3. Payment of expenditure on purchase of raw materials (in case of manufacturing institution).

4. Payment of expenditure incurred to maintain the functionality of permanent properties.

5. Payment of normal business expenses.

6. Payment of sales expenses.

32. Provosion
According to the Provosion of Indian Companies Act, 1956, organizing means the amount which:

1. Due to the decrease in the prices of permanent or movable property or for the renewal of the price-loss or the reason for the renovation, the price-loss is kept for organizing or has been written, or

2. Known Liability is kept for organizing whose amount is determined with sufficient accuracy. Can not be done.

33. Reserve
A reserve is the amount of money that is not held for property renewal or any known obligation. Of accumulation. It is well explained by Pickles - Accumulation refers to an amount that would be kept aside from profit or other savings. And whose purpose is not to do business for any known liability or reduction in the value of the property on the day of the letter.

A. Capital Reserves - Accumulations that cannot be described as profit are called capital accumulation. Capital accumulation is generally made up of the following items.

1. Pre-amalgamation benefits

2 . Balance of capital deduction account

3. Profit on withdrawal of shares

4. Excess on purchase price of net assets in case of business purchase

5. Development exemption accumulation build

6. Construction by transferring amount from profit and loss planning account by making provisions by the Articles under the Companies Act 1956. .

B. Revenue Reserve - Income accumulation is that accumulation which is not an accumulation of life. It was manufactured by the company. The company regulations are mandated by the governing body. It can be divided into the following categories
1. General Reserve
2 . Specific Reserve
3. Reserve Fund
4. Secret Reserve

1. General Reserve: - Uncertainty of the future is carried out, it is called General Accumulation. It is considered to be an indicator of the status of the Haja business displayed on the liability side of the paper. Its construction is voluntary. By all such institutions General truth is made.

2. Specific Reserve: - The amount of a blocker for a particular item from the profit-loss account, which will be used only for a particular task, is called a specific accumulation. Beneficiary distribution may be banned from the company's deposits by the company's endowment. If not done, these accumulations would have been free for gain distribution. Are. Every year for the construction of the building, the building construction accumulation made from a fixed amount after transferring the amount from the profit and loss account, the balance can be used for the distribution of dividends after the construction of the building.

3. Reserve Fund: - When a general or specific deposit is created in the business and the amount is appropriated outside the business, such accumulation is called "accumulation fund".

4. Secret Reserve: - An accumulation which is present in the business but does not appear is called secret accumulation. This accumulation is hidden behind assets and liabilities. It is constructed by decreasing the values ​​of the properties or increasing the liabilities. Sometimes, secret accumulation has been created by assuming capital items as income, such as having bought a computer in business, which has been shown in favor of profit and loss account. Thus, equal to the amount of computer. The accumulation was created. The Companies Act 1956 allows banks and power companies to create secret deposits only. The creation of clandestine accumulation is illegal for other businesses. But if the reputation of secret accumulation is built. If done by writing, then it will be considered legal.

Post a Comment