Summary

This document provides a basic overview of accounting terms, covering assets (tangible and intangible), liabilities, capital, and expenses. It explains different types of assets and liabilities, and introduces the concept of working capital.

Full Transcript

Basic Accounting Terms · ASSETS : Any physical thing or property involves in business for long time in the value of money and direct and indirect help or benifit in future. ( E.g. : Land, Building, Machinery, Stock, etc.) · Types of Assets : There are two types of assets. 1. Non Current Asse...

Basic Accounting Terms · ASSETS : Any physical thing or property involves in business for long time in the value of money and direct and indirect help or benifit in future. ( E.g. : Land, Building, Machinery, Stock, etc.) · Types of Assets : There are two types of assets. 1. Non Current Assets 2. Current Assets · Non Currest Assets : Those assets which are intention to remain in business or views for a long period of time in the business. They help in smooth and mind sound running business. ( E.g. : Land, Building, Plant, Machinery or Furniture.) · Types of Non-Current Assets : 3. Tangible Assets : Those assets which have physical existence Which can be seen and touched. ( E.g.: Building, Plant, Machinery, Furniture, etc. ) 4. Intangible Assets : Those assets who does not have physical existance. ( e.g.: Goodwill, Trade mark, Computer software, etc.) · Current Assets : Those assets which are intention for easily converted into cash within a short period of time. ( e.g.: Cash in hand, Cash at bank, Stock in trade, etc. ) · Liabilities : If an amount due to be paid to any other person or institution other than owner it is called as a liabilities. ( E.g.: Loan from bank, Bills payable, Creditors, etc. ) [ liabilities = Assets - Capital ] · Types of Liabilities : There are two types of libilities. 5. Non-current Assets / Fix Liabilities / Long Term liabilities. 6. Current Liabilities. · Non-Current Liabilities : Those liabilities which are payable after the period of more than one year. ( E.g.: Long term loan, Long term deposits, etc. ) · Current Liabilities : Those liabilities which are paid below one year. ( E.g.: Creditors, Bankoverdraft, etc. ) · Capital : Capital is the amount invested by the owner in a business. [ Capital = Total assets - Liabilities ] · Types of Capital : Ther are two types of capital. 7. Fixed Capital 8. Working Capital · Fixed Capital : The amount invested to purchased of fixed capital. (E.g.: Purchased of building, Plant, etc. ) · Working Capital : Those capital which is available for day- to-day working of business. [ Working Capital = Current assets- Current liabilities] · Debtor : A debtor is a person who owes money to the business. Debtor is a current assets. · Creditors : A creditor is a person to whom the busines owes money. It is a current liabilities. · Expenses : It means the amount spend on the cost of use of goods and service for the purpose of create profit / revenue. ( E.g.: Salary, Wages, Stationary expenses, etc. )

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