ACCOUNTING

TERMS
 Capital

It is the amount of money invested by the owners in

the business. It is also known as owner’s equity
 Drawings

It is the amount of cash or goods withdrawn by the

proprietor from the business for his personal use
 Assets

Anything that is owned by the business and which can

be valued in terms of money
 Classification of Assets

Assets

Non-current Current Tangible Intangible Fictitious

Assets Assets assets Assets Assets
 Liabilities

 Amount which the firm owes to the proprietors and

outsiders
 Liabilities

External Internal
Liability Liability

Creditors
Creditors Creditors
for
for goods for loans
expenses
 Other Concepts

 Revenue- it is the inflow of money or other assets that

results from the sale of goods or by providing services
 Expenses- Costs incurred in earning revenue are called
expenses. Examples are cost of raw material, carriage,
wages, insurance premium, rent, etc.
 Expenditure- Amount spent for purchase of assets. It
increases the earning capacity of the business. Examples
are machinery purchased, building purchased, furniture
purchased, etc.
 Profit- It is the excess of business revenue over the
business expense for a period.
 Loss- it is the excess of business expenses incurred over
the business revenue earned during a period

 Purchases- the buying of such goods and services in

which the firm deals in.

 Stock- All the goods and merchandise that the enterprise

has for the sale in ordinary course of business

 Receivables- Persons who owe money to the business

 Payables- persons to whom the business owes money

 Debtor- A person who owes money

 Creditor- A person to whom money is owing