This amount can be in the form of goods, assets, and cash, which is used in the purchase of goods and assets. It is a primary stage and basis for accounting. All goods or services that are purchased and sold for cash or credit, employee salaries, interest on borrowed money, etc, are few examples of a business transaction. It is historical in nature; it does not reflect the current worth of a business. Important terms : term of bill, due date, days of grace, date of maturity, discounting of bill, endorsement of bill, bill sent for collection, dishonor of bill, noting of bill , retirement and renewal of a bill. Government To compile national income and other information.
Learning the basics is certainly necessary and the best method to study smart is by learning from textbook solutions which are explained and solved chapter-wise. Investors and potential investors To know about Safety, growth of their investments and future of the business. Creditors Assessing the financial capability, ability of the business to pay its debts. Basic accounting terms: business transaction, account, capital, drawings, liabilities non -current and current ; assets non-current and current fixed assets tangible and intangible assets , receipts capital and revenue , expenditure capital, revenue and deferred , expense, income, profits, gains and losses, purchases, purchases returns, sales, sales returns, goods, stock, inventory, trade receivables debtors and bills receivable , trade payables creditors and bills payable , cost, vouchers, discount - trade and cash. Answer- Basic accounting terms refers to the accounting terms that are used daily in the world of business. It may be affected by window dressing i. Trading and Profit and Loss Account: Gross Profit, Operating profit and net profit.
To prevent frauds by maintaining regular and systematic accounting records. Provisions and reserves: concept, objectives and difference between provisions and reserves; types of reserves- revenue reserve, capital reserve, general reserve and specific reserves. If you have any suggestion or question about this app, Once again, Don't Forget to Rate Us, Bcz your appreciation will encourage us to work harder and smarter. Book Keeping - The Basis of Accounting Book keeping is the record-making phase of accounting which is concerned with the recording of financial transactions and events relating to business in a significant and orderly manner. Please kindly email us at: E-mail Us : freetutionclasses gmail. Bases of accounting - cash basis and accrual basis. It is done by senior staff called accountants.
. It does not give the complete picture of the financial conditions of the business unit. The distinction between the two are as under. Moreover, the figures given in financial statements ignore the effects of changes in price level. It is based on various concepts and conventions which may hamper the disclosure of realistic financial position of a business firm. Schedules and notes forming part of balance sheet and income statement to give details of various items shown in both of them. Many of the Students find Account the hardest and the time taking subject at school.
Some small size business entities do not follow the double entry system of maintaining the accounting records some business entities maintains books of accounts under the system Accounting from Incomplete records. Internal are those economic activities that have taken place within the organization. Capital expenditure, Revenue expenditure and deferred expenditure Objective and Importance. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. It is not free from personal bias and personal judgment of the people dealing with it. They help as a priceless benefit to students while completing their homework or while studying for their exams.
Automation of accounting process: meaning. Lenders Repaying capacity, credit worthiness. It ignore qualitative elements such as efficiency of management, quality of staff, customers satisfactions etc. Helps to take policy decisions. It is analytical in nature and required special skill or knowledge. To keep systematic and complete record of financial transactions in the books of accounts according to specified principles and rules to avoid the possibility of omission and fraud. Question 2 Explain a few basic accounting terms.
It is done by junior staff called book-keepers 4. Double entry system of accounting. The following results can be outlined from the above transactions. Answer- Few basic accounting terms are. For each asset, liabilities, expenses or income separate account is maintained.
Accounting treatment of bill transactions. These are very useful summary notes with neatly explained examples for best revision of the book. It gives the complete picture of the financial conditions of the business unit. Users Classification Information the user want Internal 1. Balance Sheet: need, grouping and marshalling of assets and liabilities. It is the recording phase of an accounting system.
Information relating to Financial position i. The system in which no set rules of double entry system are followed is called Accounts from Incomplete records. They would either find it simple or complex and it all relies upon how they comprehend the concepts. That's not true, indeed, if you know how to appreciate the beauty of this app and how to use and get good results in this subject. To ascertain the financial position of the business by the means of financial statement i. Such of purchase of goods and services. It provides information which is useful to management for making economic decisions.