Accounting is the art of recording,classifying and summarising ain a significant manner and in terms of money,transactions and events which

are,inpart at least ,of a financial character and interpreting the results there of. Book keeping is the art of recording business transactions in regular and systematic manner. Capital is the amount invested by properitor in the business. Drawings is the value of cash or goods withdrawn from the business by the owner for personal use. Debtor is a person who owes money to business. Creditor is a person to whom the business owes money. Assets refer to any properties or things owned by business including the amount due to it from the others Ex:machinery,stock,cash and bank balances,Investments etc. Liability refer to debts or amounts due from a business to others either for money borrowed or for goods or assets purchased on credit or services received without making immediate payement Ex: Bank Loan or Overdraft,Trade creditors,Outstanding expenses Equity refers to claims against the assets of business. Bad debt is irrecoverable. Revenue refers to earnings of business. Accounting concepts: Business Entity,Going Concern,Accounting period,Cost,Money Measurement,Dual Aspect concepts Accounting conventions:Convention of Consistency,Disclosure,Materialty,Conservatism Financial Accounting deals with recording,classifying and summarising business events. Cost accounting :To find the cost of the goods produced and services by business concern Management Accounting is concerned with internal reporting of info. to mgmt. for planning ,controlling,decision making and formulating long term plans. Cash Basis:entries are made only when cash is received is made or paid...revenues are not recognised and recorded unless they are received in cash. Mercentile or Accrual basis :income and expenses are considered on the basis of their occurrences in accounting period Personal A/c: Debit the receiver,Credit the giver Real A/c: Debit what Comes in,credit what goes out Nominal A/c:Debit expenses and losses,credit incomes and gains Journal is an account book where business transactions are first recorded. Ledger is a book in which various accounts are opened. Brought down(b/d) is written in ledger to show opening balance in any account Carried down(c/d) is written in ledger at the time of closing the account. Subsidiary books are books of original entry as all transactions are first recorded in these books before they are recorded in respective accounts in ledger. Cash book is a book of prime,or first entry,because all cash transactions are first recorded in cash book.

Trial balance is a statement containing the credit and debit balances,to provide a simple check on integrity of recorded figures. Capital Expenditure is that expenditure which results in the acquisition of an asset or which results in an increase in the earning capacity .Ex: acquisition of land,machinery Revenue Expenditure :Any item of expenditure whose benefit expires within the year or expenditure which merely seeks to maintain the business or to keep assets in good working condition is revenue expenditure.Ex:administration expenses. Deferred revenue expenditure:A Heavy expenditure of revenue nature incurred for getting benefits over a period of years is called deferred revenue expenditure.Preliminary expenses,advertisement. Capital Receipts are the amount realised by the way of loan,sale of permanent or fixed assets etc Revenue receipts are the amount realised on sale of goods in which the proprietor deals,interest on investments etc are revenue receipts. Trading a/c is prepared mainly to know the profitability of goods bought and sold by business man.It shows the result of trading i.e buying and selling of goods called Gross Profit or Gross loss P&L a/c is an account which shows the net profit or net loss of a business for particular period. Balance sheet is prepared to know the financial position of business on particular date.It is a statement which shows the assets and liabilities as on particular date. Current assets are those assets which are converted into cash in the normal course of business within a short period.cash,debtors,stock,prepaidexpenses. Fictitious assets dont have any value.ad expense,discount on issue of shares and debentures Current liabilities are those ehich are payable within short period.bills payable,outstanding expenses,trade creditors. Contingent liabilities refers to an obligation to pay on the happening or non happening of an uncertain event.it is not recorded in balance sheet. Depreciation is a gradual,permanent and continuous decrease in utility value of fixed asset. Amortisation refers to fall in value of intangible assets. Fixed installement method,dimishing balance method,sum of years Provision is a charge against profit and is created to meet a known loss or expected contingency. Reserve is an appropriation of profit and does not affect the amount of net profit.can be distributed as profit. Financial mgmt. is the (Planning and controlling ) of mgmt. of the firm financial resources. Investment,financing,dividend,liquidity decisions are the major types of financial decisions. Agency conflicts exists between 1.Shareholders and mgmt. 2.shareholders vs stock holders. Capital budgeting refers to long term planning proposed capital outlay and their financing.It includes fund raising and their utilization.It is a decision making process by which a firm evaluates the purchase of major fixed assets. Project generation,evaluation,selection,implementation,review are steps in Capital budgeting process. Pay Back refers to the period in which the project will generate the necessary cash to recoup initial investment. NPV is the difference between the present value of cash inflows and cashoutflows.

IRR is the rate at which sum of discounted cash inflows equal to sum of discounted cash outflows. PI is the ratio between the present value of cashinflows and present value of cash outflows Risk Adjusted discount rate (RADR) is a combination of risk free rate and risk premium. Risk premium rate is the extra return expected by investor over the normal rate due to risk associated with project. Capital rationing is the distribution of capital in favour of more accepted proposals. Goodwill is the premium paid by an acquiring company over and above the acquired company's tangible book value. On a company's balance sheet, goodwill represents the sum of all the premiums the company has paid for all of its acquisitions (although occasionally goodwill from past acquisitions whose value has fallen is written down).