Important term of Accounting?

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Important term of Accounting?

  1. Business:- Any trade manufacture or same work of enterprise, which is meant to earn profit.
  2. Transaction:- The act of exchanging goods services for a valuable consideration.
  3. Goods:- These are the commodities which are dealt in business transaction. They may be raw material, manufactured goods or services.
  4. Discount:- Discount is the amount deduction allowed by a business man to increase the sale of a product. Discount is of two types.
    • Trade Discount: – The discount allowed by a seller to its customers at a fixed. Percentage on the listed price of goods is termed as trade discount.
    • Cash Discount: – This discount is allowed to the debtors for making prompt payment within a fixed period.
  5. Bad Debts: – Person to whom goods have been sold an credit ore know as ‘Debtors sometime due to discount, full or partial amount can not be recorded, which is know as ‘Bad debts’.
  6. Liability:- Those items that the con business enwinds to the coaster world are know as liability. Liability are debts and are amount to credit it can be expressed as liability= assets-capital.
  7. Assets:- Any thing which is in the possession or is the property of business enterprise including the amount due to it from other is called an assets in other words anything which will enable business enterprise to get cash or a benefit in. future in an assets. For example:- Building, Land, Furniture, Debtors.
  8. Debtors:- A person who owes money to the firm generally on account of credit sales of goods called a debtor. A debtor pays the price of goods he purchases in future he is called Debtors.
  9. Receivables:- the amount that is receivable by the firm, other then the amount due from the debtors.
  10. Creditors:- A person to whom the firm owes money is called a creditor.
  11. Payable:- The term payables is used for the amount payable by the firm, other then the amount due to creditors.
  12. Stock:- The term ‘stock included goods lying unsold on a particular date.
  13. Purchase:- The amount of goods purchased by a business man for selling purpose or sale is called purchases my on cash or credit basic in the latter case the payment in made at a future date.
  14. Sales:- These are goods sold out by the business sales may be cash sales or credit sales, in latter case, the customer do not pay cash immediately but promise to pay in future.
  15. Drawings:- It is the amount of money or the value of goods. Which the proprietor takes for his domestic or personal use.
  16. Gross Profit:- It is the difference between the sales revenue and the process of goods sold and services rendered oven its direct cash.
  17. Net profit:- It is the profit made after allowing for all expenses in case expenses are more than the revenue it is net loss.
  18. Capital:- When a person starts any business or profession, he brings some money in cash and some other assets like building, furniture and machinery. These will be his capital.
  19. Share:- In accounting, a “share” refers to a unit of ownership in a company or financial asset that is offered for sale to investors. Shares are most commonly associated with corporate stocks, representing an equity stake in a company. When you own shares of a company, you own a portion of that company, and your ownership is proportional to the number of shares you hold relative to the total number of shares outstanding.
    • Preference share:- a share in a company carrying a right to be paid a fixed amount (called a ‘preference dividend’) each year out of the company’s profits, other members of the company being left to share whatever profits are left after payment of the preference dividends. The size of a preference dividend is usually expressed as a percentage of the nominal value of a share. Preference shares are said to be ‘cumulative’ if a preference dividend that is not paid in one year, because of lack of profits, has to be paid in the next year in which sufficient profits are made.
    • Equity share:- The rate of dividend for such  shares is not pre-determined. It depends on the amount of surplus profit after providing dividend to preference share holders.

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