Basic Accounting Terms

Basic Accounting Terms

Year : Calendar year and Financial year

Depreciation : Reasons of depreciation ➢ (i) Use of assets (ii) passage of time

Voucher

Goods and Its Types

Stock/Inventory and Its Types : Opening Stock and Closing Stock

Manufacturer, Trader and Insolvent

Proprietor

Debtor and Creditor

Bills Payable and Bills Receivable

Drawing, Entry and Account

Accountancy and Accounting 

Cost and Its Element : Material, Labour and Overheads

Liability and Provision

Reserve and Bad Debts

Doubtful Debts and Bad Debts Recover

Transaction

Capital

Debit

Credit

Revenue

Expenses and Income

Profit, Gain and Loss

Purchase and Purchase Return / Return Outwards

Sale and Sale Return / Return Inward

Discount and Its Kind  : Trade Discount and Cash Discount

Types of Capital & Revenue nature items : Capital nature items, Revenue nature items

Classification of Expenditure : Capital Expenditure, Revenue Expenditure

Capital Expenditure  :- Contents #

➢Relation with fixed asset

➢Not for sale

➢Long term benefit

➢Increase the value of assets

➢Increase the profit earing capacity of the business

➢Rare expenditure

➢Shown in the asset side of the balance sheet

Example of Capital Expenditure

Revenue Expenditure :

Contents #

➢ Relation with production to sale of goods

➢ Short term benefit

➢ Routine expenses

➢ To maintain the assets but they do not increase the value of an asset.

➢ Do not increase the profit earning capacity of the concern but simply maintain it.

➢ Shown on the debit side of the trading and P/L Account.

Example of Revenue Expenditure

Classification of Income/Receipt

Capital Receipt and Its Example

Revenue Receipt and Its example

Differed Revenue expenditure

Classification of Liabilities

Assets and Its Classification

Goodwill

Copyright

Patent

Trademark

Commerce

Whole sale trade

Primary industry

Secondary industry

Father of accounting In India