Short Notes of Accounting

Balance Sheet: A list of all the assets controlled and all the liabilities owed by a business at a
particular date. It is a snapshot of the financial position of the business at a particular
moment.
Cash Book: The book of original entry for receipts and payments in the business’s bank
account.
Going Concern: An entity is viewed to be operated for the foreseeable future.
Accrual Basis of Accounting: Accrual basis means the transactions must recognized when
the occur not when the cash received and payment.
Revenue Recognition Principle: The revenue recognition principle prescribes that revenue
should be recognized in the accounting period in which they are earned (Generally
Matching Principle: Matching principle suggests that companies should match revenues
with expenses of the same period to determine the profit.
Unearned Revenue: Cash received in advance prior to rendering services or delivering
goods to the buyers is called Unearned Revenue.
Deferred Expenditure: An expenditure for which payment has been made or a liability
incurred but which is carried forward on the presumption that it will be of benefit over a
subsequent period or periods. This is also referred to as deferred revenue expenditure.
Bad Debt: A debt which is not expected to be paid is called bad debt. Bad debt expenses are
shown as an administrative expense and offset against trade receivables.
Doubtful Debt: If there is doubt that a specific debt will be recovered is called doubtful
debt. An allowance for doubtful debt is made, which is set off against the statement of
financial position.
Materiality: A piece of information is considered material if its omissions or misstatements
could individually or collectively impact the economic decisions of users taken on the basis
of the financial statement.
Substance over form: Transactions and other events are accounted for and presented in
accordance with their economic substance and not merely on the basis of their legal forms.
Doing so, the financial information becomes more relevant for the decision-making process.
Suspense Account: an account into which payments are put temporarily when the
accountant cannot be sure where they should be entered.