Basic Accounting Terms PDF

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. )