BASIC TERMS IN ACCOUNTING

BASIC TERMS IN ACCOUNTING 

• Entity : Entity has a define individual existence, Business Entity is an identifiable business enterprise such as Super Bazaar, etc.

• Transaction : Transaction is an event involving some value between two or more entities.

• Assets : Assets are economic resources of an enterprise that can be expressed in monetary terms "Fixed Assets" are assets held on a long term basis such as land, buildings, etc. "Current Assets" are assets held on a short term basis such as debtors, bills receivables, etc.

• Profit : Profit is the excess of the revenues of a period over its related expenses during an accounting year. Profit increases the investment of the owners.

• Gain : Gain is a profit that arises from events or transactions which are incidental to business such as sale of fixed assets, winning a court case, appreciation in the value of an asset.

• Loss : The excess of expenses of a period over its related revenues is termed as loss.

• Discount : Discount is the deduction in the price of goods on sale.

• Voucher : The documentary evidence in support of a transaction is known as Voucher.

• Goods : Goods refer to the products which a business unit products and sells, or by and sells.

• Drawings : Withdrawal of money and/ or goods by the owner from the business for personal use is known as drawing. Drawing reduce the investment of owners.
• Purchases : Purchases are a total amount of goods procured by business on credit and cash, for use or sale.
• Stock : Stock (inventory) is a measure of something on hand - goods, spares and other items in a business, It is called "Stock in hand"
• Debtors : Debtor's Persons and / or other entities who owe enterprise money, having bought goods and services on credit.
• Creditors : Creditors are persons and / or other entities who have be paid by an enterprise for providing goods and services on credit.

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