Accounting Concepts+Revenue+expenses

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 thei 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. All these costs are necessary to attract and serve the customers and thereby to obtain 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 die "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 tt which economic information is communicated to all the parties concerned. In order to make this languaj easily understandable all over the world, it is necessary to frame or make certain unifonn standards whicl 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 common!] associated with the theory and procedures of accounting. They are serving as an explanation of practices and as a guide for selection of conventions or procedures where alternatives exist. principles can be classified into two groups. .
(i) Accounting concepts (ii) Accounting conventions.
Accounting Concepts:
Going concern concept Cost concept
Accounting period concept Realization concept.
The term 'concepts' includes those basic assumptions or conditions on which the science o^ 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 (viii)