Problem with Solution and accounting concepts

For example, we sold goods to a customer for Rs. 1000 and he paid cash to us Rs. 1000 revenue will be equal to inflow of cash Rs. 1000. But if the customer has paid only Rs. 500 a remaining amounts he agreed to pay at some future date, again in that case the revenue will be eqi Rs. 1000 (inflow of cash Rs. 500 + Rs. 500 receivable).
TYPES OF REVENUE:
1. Sales: The_total price of goods sold
2. Interest earned
3. Fees earned
4. Rent earned
5. Commission earned
22. EXPENSES:
Expenses are the costs of the goods and services used up in the process of obtaining revenue.
Or Expenses are the cost of producing revenue in a particular accounting period.
Or
An expense is a sacrifice, or cost incurred to generate revenue.
For example, salaries for employees, telephone charges, rent of the building, insurance transportation etc. AH these costs are necessary to attract and serve the customers and thereby to ob^ revenue. Expenses are sometimes also referred to as the "cost of doing business" or "expired costs".
23. NET INCOME OR NET PROFIT:
Net income or net profit is simply the amount by which the "revenue" for a particular period time exceed the "expenses" incurred to generate them.
Net income or net profit = Revenue- Expenses:
ACCOUNTING PRINCIPLES
It has already been stated in this chapter that Accounting is the language of business threw which economic information is communicated to all the parties concerned. In order to make this langu easily understandable all over the world, it is necessary to frame or make certain uniform standards wri are acceptable universally. These standards are termed as "Accounting Principles".
Accounting principles may be defined as those rules of action or conduct which are adopted by accounts universally while recording accounting transactions. They are a body of doctrines commc associated with the theory and procedures of accounting. They are serving as an explanation of cun practices and as a guide for selection of conventions or procedures where alterhatives exist. Tl principles can be classified into two groups. .
(i) Accounting concepts (ii) Accounting conventions.
Accounting Concepts:
Going concern concept Cost concept
Accounting period concept Realisation concept.
The term 'concepts' includes those basic assumptions or conditions on which the scienc accounting is based. The following are the important accounting concepts:
(i) Separate Entity Concept (ii)
(iii) Money measurement concept (iv)
(v) Dual Aspect concept (vi)
(vii> Matching concept