*ACCOUNTING: - Accounting is a process of Identifying, Recording, Summarizing and Reporting economic information of transaction of goods or services of on significant manner for decision makes in the end of financial year of financial statements. It is also called life blood of business
*TRADE: - Trade is the activity of buying and selling of goods or services for earning purpose of profit.
*PROFESSION: - Any types of work that needs special training or a particular skill and high level of education for purpose of earning income.
Ex: - Teacher Engineer, Lawyer etc.
*BUSINESS: - Business is such recognized work which is done for purpose of earning profit and income. Buying and selling as way of earning money include in it.
NOTE: - 1.✍Trade and Profession are part of Business.
*OWNER:- A person or groups of person who operate the trade invest capital in business and also bear his losses in business.
NOTE: - 1.✍ if owner is a single person then called him Proprietor.
NOTE: - 2.✍If owner is two or more than two persons then called them Partners.
NOTE: - 3.)s ` )—If owner is a group of persons or company then called them Shareholders
*GOODS: - Any types of tangible things that are used for trade or se selling and buying. Ex: - Ready-mades clothes, Row material of clothes
*PURCHASE:- Bought the goods in trade for selling purpose is called purchase.
Purchase can be cash or credit.
*SALES:- Sales is goods sold by a businessman from his business to own customer.
It can be in cash or credit.
*PURCHASE RETURN/REJECTION IN/OUTWARD INVOICE: - Purchase return means the return of the full or a part of the goods purchased by the owner of Business to their suppliers.
*SALE RETURN/REJECTION OUT/INWARD INVOICE: - Sales return means the return of the full or a part of the goods sold by the customer to his Businessman.
*STOCK: - Any amount of goods available in our business's Godowns in present time.
Ending of financial year available stock is called Closing Stock and starting of financial year available stock is called Opening Stock.
*DRAWING: - Drawing are the amounts withdrawn by the owner of Business from own business for his personal, private and domestic purpose.
Drawing may be in the form of Cash, Goods or Assets of his business.
*DEBTORS: - Debtors is the person who gives/owes amount of money or valuable things to the Businessman.
*CREDITORS: - Creditor is the person whom amounts are taken/owed by the Businessman.
*EXPENSES: - All money/cost are invested in production and selling of goods.
There are two types of expenses:-
(1).DIRECT EXPENSES: - Direct expenses are those expenses that are invested in production of goods to selling of goods.
Ex: - wages, factory electricity bill, fuels.
(2). INDIRECT EXPENSES: - Indirect expenses those expenses that are invested in office and selling related.
Ex: - commission paid, interest paid, depreciation, advertisement etc.
*REVENUE: - It is the income generated from sale of goods or services in market or to customer.
*INCOME: - If we subtracted the expenses from revenue, we get income.
Net Income= Revenue - expenses.
Incomes are two types:-
(1). DIRECT INCOME: - All types of incomes, we earn from our main business.
Ex: - income from sale of goods.
(2). INDIRECT INCOME: - Indirect income is one which earned by the way of non Business activities.
Ex: - sale of old newspapers, sale of cartoon boxes, commission received, and interest received etc.
*DISCOUNT: - A discount is a reduction in usual or real price of something.
There are four types of discount:-
(1). TRADE DISCOUNT: - It is allowed for manufacturers to dealers, dealers to wholesalers, and wholesalers to retailers in goods.
(2).CASH DISCOUNT: - It is allow at the time of CASH payment.
Ex: - Cash paid in given time at @5% discount.
(3). COMMUDITY DISCOUNT: - This is quantity based discount.
Ex: - Buy '2' get '1' free.
(4). SPECIAL DISCOUNT: - It is allowed to permanent customer on the special occasion.
Ex: - Diwali offer for special customer.
*BAD DEBTS: - A bad debts is a receivables amount that a customer will not pay by any types of reason.
*TRANSACTIONS: - All types of receiving and paying or exchange in goods or Cash is called transactions.
Transactions can be in Cash or credit.
*VOUCHER: - A voucher is certificate or documents that can be used as proof in future for buy or sell of goods or services.
Ex: - Receipt, Bill, Slip, Cheque etc.
*ASSETS: - Assets are things and properties in business which is not for resale but also for the use in the business.
There are two types of Assets:-
(1) FIXED ASSETS: - Such assets purchased for use only not for resale. Ex: - Machinery, land, trademarks etc.
fixed assets are two types:-
(a). TANGIBLE FIXED ASSETS: - It has physical existence that means we can touch it as physically.
Ex: - land, Building etc.
(b). INTANGIBLE FIXED ASSETS:- It has not physical existence that means we cannot touch it as physically but derived its value.
Ex: - Goodwill, Trademarks, Copyright etc.
(2). CURRENT ASSETS: - Current assets are convertible into Cash in short period of time or one calendar or one financial year.
Ex: - Cash-in-hand, Cash-in-bank, stock of goods, debtors etc.
*LIABILITIES: - All amounts are payable by a business to any person or outsiders.
There are two types of liabilities:-
(1). SHORT-TERM LIABILITY/CURRENT LIABILITY:- These liability has to pay within one calendar year(within 12 months) or financial year.
Ex: - short term loan, bills payable, creditors etc.
(2). LONG-TERM LIABILITY/FIXED LIABILITY: - These liabilities have to pay after one calendar year (after 12 months) or financial year.
Ex: - Long-term lone, Debenture etc.
*CAPITAL: - Capital in is the amounts of goods or assets invested in starting time of Business by owner of Business in business.
There are two types of capitals:-
(1).FIXED CAPITAL: - These capitals are invested in business for once time.
Ex: - Machinery, Furniture, Credit Purchase etc.
(2).WORKING CAPITAL: - These are invested in business day-to-day working time.
Ex: - Cash etc.
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