Accounting Terms

There are various types of accounting:

1. Debtors : Person to whom goods sold on credit and from whom money is receivable is called debtors.

2. Creditors: Person from whom goods purchased on credit and to whom money is payable is called creditors.

3. Assets: Assets are the obligation of the business which are held and used in the businessman  for future use. Example: Furniture A/c, Machinery A/c, Stock-in-trade, 

Cash balance, Bank  balance.

Assets are of two types:

         a. Fixed Assets

         b. Current Assets

a. Fixed Assets: Fixed Assets are those assets which are used in the business for more than one year. Example : Machinery A/c, Furniture A/c, Building A/c.

b. Current Assets: Current Assets are those assets which are used in the business for one year or within the year. Example: Cash balance, Bank balance, Debtors, Creditors, Stock, Billy Receivable.

4.Liabilities:  These are the obligation of the business against which benefit is acquired in the form of goods, assets, cash or services. Example: Loan taken , Supplier of goods, outstanding expenses etc.

5. Goods: Articles or products produced or purchased for the purpose of re-sale is called goods. Example: Furniture dealers purchased furniture for re-sale.

6. Bad Debt: The money which is not recovered or covered is called bad debts.

7. Expense: The money which is spent on day to day activities is called expense.

8. Income: The money which is earn from the business is called income.

9. Discount: Discount is an allowance or deduction at certain  rate percent on amount receivable or payable.

10.Drawings: Benefit taken by proprietor or owner from business in the form of cash, goods, asset or services.

11. Transactions: Transactions refers to an event which brings a monetary change. Transactions can be measured in terms of money.