Generally accepted accounting principle
ICWAI:-Institute of cost and work Accountants of india.
ICAI:-Institute of Chartered Accountants of india
AICPA:-American institute of certified public Accountants
Basic accounting terms
1)Capital
It is the amount which the proprietor has invested in the firm.
2)Long Term Liabilities
These are those liabilities which are payable after a long term.
Ex:Loans,debentures
3)Current Liabilities
liabilities which are payable in near future.
Ex:-creditors,bill payable
4)Fixed Assets
Assets purchased for operating the business
Ex:furniture,building.
5)Current Assets
Those assets which are kept for short term for converting into cash.
Ex:debtors,bank balance
5)Income
It is the profit earned during the period of time.
In other words the difference between revenue and expense is called income.
6)Expense
It is the amount spent in order to produce and sell the goods and services which produce the revenue.(it is the cost of the use of things or the services which produce the revenue).
Ex:payment of salary,wages,rent
7)Debtors
A debtor is a person or entity that owes money. In other words, the debtor has a debt or legal obligation to pay an amount to another person or entity. For example, if you borrow $10,000 from a bank, you are the debtor and the bank is the creditor.
or
A person who owes money to the firm.
Ex:we are selling our products to customer(credit sale)
debtors:customer
creditors:our own company
8)Creditor
A person to whom the firm owes money is called a Creditor.
Ex:we are purchasing some goods from suppliers without cash(credit)
hence
creditor:supplier
debitor:Our Own company
or
A creditor is a person, bank, or other enterprise that has lent money or extended credit to another party. (The party to whom the credit has been granted is often a customer that will now be referred to as a debtor.) If Company X borrowed money from its bank, Company X is the debtor and the bank is the creditor.
9)Cost of goods sold
It is the direct cost of the goods or services sold.
10)Net Profit
It is the profit made after allowing for all expenses.In case expenses are more than revenue it is net loss.
11)Gross Profit
It is the difference between sales revenue or the proceeds of goods sold and services rendered over its direct cost.
12)Drawings
Amount of money or the value of goods which the proprietor takes for his domestic or personal use.
13)Revenue
It means the amount which,as a result of operations is added to the capital.
Revenue is an inflow of assets,which results in an increase in owners equity.
Eg:-sales of goods,rent income.
14)Receivable
The amount that is receivable by the firm,other than the amount due from the debtors.
15)Payable
The amount payable by the firm,other than amount due to creditors.
8)Creditor
A person to whom the firm owes money is called a Creditor.
Ex:we are purchasing some goods from suppliers without cash(credit)
hence
creditor:supplier
debitor:Our Own company
or
A creditor is a person, bank, or other enterprise that has lent money or extended credit to another party. (The party to whom the credit has been granted is often a customer that will now be referred to as a debtor.) If Company X borrowed money from its bank, Company X is the debtor and the bank is the creditor.
9)Cost of goods sold
It is the direct cost of the goods or services sold.
10)Net Profit
It is the profit made after allowing for all expenses.In case expenses are more than revenue it is net loss.
11)Gross Profit
It is the difference between sales revenue or the proceeds of goods sold and services rendered over its direct cost.
12)Drawings
Amount of money or the value of goods which the proprietor takes for his domestic or personal use.
13)Revenue
It means the amount which,as a result of operations is added to the capital.
Revenue is an inflow of assets,which results in an increase in owners equity.
Eg:-sales of goods,rent income.
14)Receivable
The amount that is receivable by the firm,other than the amount due from the debtors.
15)Payable
The amount payable by the firm,other than amount due to creditors.
Basic Rule
1)Personal Account
debit:receiver
credit:giver
2)Real Account
debit:What comes in
credit:What Goes out
3)Nominal Account
debit:Expenses & Loss
credit:Income & Gain
No comments:
Post a Comment