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)
Thursday, July 22, 2010
Accounting Basic Element
ASSETS:
Assets are the economic resources (having certain value) owned by a business on a particular date I which are expected to benefit the future operation of the business.
Or
Assets are the properties and possessions of a business both tangible (have physical existence) and e fliave no ohvsical existence).
te (have no physical existence).
Or
Assets are the things having certain value possessed by a business and receivable by a business on date. For example, cash, furniture, building, land, machinery, stock of goods, Debtors or receivable, Bank balance, 'Goodwill etc.
LIABILITIES:
Liabilities are the debts or obligations of a business.
Or
The outsider's (creditors etc.) claims against the assets of the business are known as "Liabilities". are two main parties who have chums, against the assets of a business; (a) Owner's claim; (b) claims. The owner's claim against the assets of a business is blown as owner's equity and 's claims against the assets of the business are known as "liabilities."
Or
Liabilities mean the total amount which a business is legally bound id pay to the outsiders, e.g, i, Bills payable, Accounts payable, Bank loan etc.
ACCOUNTING PERIOD:
It is a span of time for which a business generally prepares its financial statements (the statement to know the profit or loss of a business and to mow its financial position). Mostly the financial are prepared for one year but they may also be prepared for one month or for one quarter.
REVENUE:
All business organisations are engaged in providing goods or services to theif customers. The which a business charges its customers for these goods or services, measures the revenue of the
tOr It is the price of goods sold or services provided by a business to its customers.
Revenue is the inflow of assets (cash or debtors) in return for services performed or goods (sold) during an accounting period.
Or
It is inflow of cash and debtors (receivable) in exchange for goods sold or services rendered during mting period.
Friday, July 16, 2010
CAPITAL OR OWNER'S EQUITY
CAPITAL OR OWNER'S EQUITY
high bridge capital
equity capital
investors' capital
financial capital
capital funding
capital funds
private equity capital
adviser capital
capital adviser
capital asset management
capital equities
prairie capital
capital investment manage
money management
To understand. this Tenn, recall that business is an entity (organization) separate from its owner or owners. Equities mean the sources of funds provided to start or" to operate a business entity. Now the question is; who provides funds to a business unit Mainly there are two sources of funds:
(a) Funds supplied by the owner/owners.
(b) Funds supplied by the external parties like bank etc.
So, the amount of cash or goods invested (supplied) by the owner/owners in a business] unit is known as "capital" or owner's equity.
Or
Capital is the money or moneys worth borrowed by a business unit from its owner
Or
It is the claim or right of the owner to owners against the assets (properties etc. possessed by business) of the business.
Or It is the source of funds provided by the owner/owners of the business.
Or It is a part of the total equity which is supplied by the owner/owners.
high bridge capital
equity capital
investors' capital
financial capital
capital funding
capital funds
private equity capital
adviser capital
capital adviser
capital asset management
capital equities
prairie capital
capital investment manage
money management
CASH DISCOUNT
Cash Discount
buy discount
cash buying
Cartier discount
cash discount formula
discount cheap
check discount
discount free shipping
account cash
It is a deduction or allowance given by a creditor to a debtor if the amount due is paid by the debtor before the due dale, or it is a reduction in price (usually 2% or less) offered by manufacturers or wholesalers (creditors) to encourage customers, (debtors) to pay their debts within a specified discounted period. For example, X sold .goods to Y (a customer) for Rs. IQOO on credit basis. It means, X is creditor and Y is debtor. X offers an allowance of 2% to Y, if he will pay his debts within 15 days. It means, if Y pays his debts within 15 days, then he will pay only Rs. 980 (1000 - 20) to X. Such a discount is known as' Tash Discount".
buy discount
cash buying
Cartier discount
cash discount formula
discount cheap
check discount
discount free shipping
account cash
CREDITORS OR ACCOUNTS PAYABLE:
CREDITORS OR ACCOUNTS PAYABLE:
creditor
creditor attorneys
creditor attorney
creditor rights
creditor settlement
creditor lawsuit
creditor garnishment
judgment creditor
creditor collection
creditor harassment
creditor claims
creditor garnish wages
stop creditors from calling
stop garnishment
debt collection lawsuit
creditor addresses
creditor problems
creditor and debtor
general creditor
When goods are purchased from the suppliers (sellers) on credit basis, creditors come into existence. Creditors are the persons or suppliers from whom goods have been purchased on credit basis and bo whom the money is to be paid in near future. The accounts of such persons (suppliers) are known as accounts payable". Accounts payable means, the amount which a business expects to pay to its suppliers for goods purchased or services received from them on credit basis.
creditor
creditor attorneys
creditor attorney
creditor rights
creditor settlement
creditor lawsuit
creditor garnishment
judgment creditor
creditor collection
creditor harassment
creditor claims
creditor garnish wages
stop creditors from calling
stop garnishment
debt collection lawsuit
creditor addresses
creditor problems
creditor and debtor
general creditor
DEBTORS OR ACCOUNTS RECEIVABLE
DEBTORS OR ACCOUNTS RECEIVABLE:
When goods are sold to the customers on credit basis (credit sales are made to customers), debtors come into existence. Debtors are Ac persons or customers to whom goods have been sold on credit basis and from whom the business is to receive money in near future. The accounts of such-customers are known as "Accounts Receivable". For example, we sold goods to A for Rs. 3000. toB forRs. 2000 and to C for Rs. 4000 on credit basis. The amount receivable from them (A, B and C) is known as "Debts" and the three customers, A, B and C are our debtors or accounts receivable.
accounting bookkeeping
accounting for sales tax
property accounting
web accounting
accounting software
accounting companies
fixed assets accounting
accounts receivable aging
accounts payable receivable
accounts receivable procedures
accounts receivable factor
accounts receivable loans
accounts receivable loan
Accouting best Notes ever
Purchases returns" or "Returns to suppliers". For example, we purchased 100 radio sets (goods) from Lahore Electronics for Rs. 15000. On receiving the delivery of goods, it is found that 10 radio sets are of inferior quality. The return of these 10 radio sets to the seller (Lahore Electronics) will be a case of purchases returns.
7. PURCHASES DISCOUNT AND SALES DISCOUNT:
The Concession given by the supplier to the buyer on purchases of goods is known as "Purchases discount" to the buyer and "Sales discount" to the seller (supplier).
8. ALLOWANCES:
Sometimes, the customers (buyers) find that goods purchased have minor defects. In that case, the seller may agree to reduce the price of damaged or defective goods to induce the. buyer to keep the goods. Such reduction in price is known as "Purchases allowance" to the buyer and "Sales allowance" to the seller.
9. SALES:
We know that goods are purchased for selling purposes^ When these goods are sold to customers at a specific price, it is said that sales have been made. For example, we purchased goods worth Rs. 5000 (our purchases). Suppose, these goods have been sold at a price of Rs. .6000 — in accounting language it will be said that sales have been made at Rs. 6000. So goods sold are called "Sales".
10. CASH SALES:
If goods are sold to customers at a specific price and price of the goods is received from them at the time of sale of goods, such sales are known as "Cash sales". For example, we sold goods to a customer, Mr. A for Rs. 2000 on 10th January, 2005 and received the cash from him on the same date, it will be a case of cash sales.
11. CREDIT SALES;
If goods are sold to a customer and he does not pay the price of goods at the same time but agrees to make payment on some future date, the sales are called "credit sales" or "Sales on account." For example, we sold goods to Mr. X for Rs. 3000 on 15th January, 2005 and he agreed to make payment on 3Ist January, 2005, it will be a case of credit sales or sales on account.
12. SALES RETURNS OR RETURNS INWARDS:
If a customer to whom goods have been sold finds that the goods are defective, unsatisfactory, below standard or not according to specification, he may return these goods to the seller. To the seller, such return of goods is known as "Sales returns" or "Returns Inwards" or "Returns from customers.
13. TRADE DISCOUNT:
At the time of selling goods, the manufacturer or wholesaler allows retailers such a discount (concession). It is allowed at a certain percentage of the listed or catalog price. For example, the list price of the goods is Rs. 30000, and the wholesaler allows a trade discount of 10% on the listed price to the retailer. It means the net price of the goods is 27000 (30000-3000). The trade discount enables the retailer: to sell goods at die listed price; and the customer can be sure about the fair {nice of the goods. It may be noted that both the buyer and seller will record Rs. 27000 (not Rs. 30,000) in their books of account. In other words trade discount is not recorded in books of account Thus, discount allowed by manufacturer or wholesaler at the time of selling goods to retailer as a deduction from the listed price or catalog price, is called Trade Discount.
branches of accounting
web accounting
sales tax accounting
asset accounts
accounting companies
valuation accounting
amortization accounting
investment accounting
accounting loss
equity accounting
accounting accrual
corporate accounting
payroll accountant
accounting outsourcing
partnership accounting
7. PURCHASES DISCOUNT AND SALES DISCOUNT:
The Concession given by the supplier to the buyer on purchases of goods is known as "Purchases discount" to the buyer and "Sales discount" to the seller (supplier).
8. ALLOWANCES:
Sometimes, the customers (buyers) find that goods purchased have minor defects. In that case, the seller may agree to reduce the price of damaged or defective goods to induce the. buyer to keep the goods. Such reduction in price is known as "Purchases allowance" to the buyer and "Sales allowance" to the seller.
9. SALES:
We know that goods are purchased for selling purposes^ When these goods are sold to customers at a specific price, it is said that sales have been made. For example, we purchased goods worth Rs. 5000 (our purchases). Suppose, these goods have been sold at a price of Rs. .6000 — in accounting language it will be said that sales have been made at Rs. 6000. So goods sold are called "Sales".
10. CASH SALES:
If goods are sold to customers at a specific price and price of the goods is received from them at the time of sale of goods, such sales are known as "Cash sales". For example, we sold goods to a customer, Mr. A for Rs. 2000 on 10th January, 2005 and received the cash from him on the same date, it will be a case of cash sales.
11. CREDIT SALES;
If goods are sold to a customer and he does not pay the price of goods at the same time but agrees to make payment on some future date, the sales are called "credit sales" or "Sales on account." For example, we sold goods to Mr. X for Rs. 3000 on 15th January, 2005 and he agreed to make payment on 3Ist January, 2005, it will be a case of credit sales or sales on account.
12. SALES RETURNS OR RETURNS INWARDS:
If a customer to whom goods have been sold finds that the goods are defective, unsatisfactory, below standard or not according to specification, he may return these goods to the seller. To the seller, such return of goods is known as "Sales returns" or "Returns Inwards" or "Returns from customers.
13. TRADE DISCOUNT:
At the time of selling goods, the manufacturer or wholesaler allows retailers such a discount (concession). It is allowed at a certain percentage of the listed or catalog price. For example, the list price of the goods is Rs. 30000, and the wholesaler allows a trade discount of 10% on the listed price to the retailer. It means the net price of the goods is 27000 (30000-3000). The trade discount enables the retailer: to sell goods at die listed price; and the customer can be sure about the fair {nice of the goods. It may be noted that both the buyer and seller will record Rs. 27000 (not Rs. 30,000) in their books of account. In other words trade discount is not recorded in books of account Thus, discount allowed by manufacturer or wholesaler at the time of selling goods to retailer as a deduction from the listed price or catalog price, is called Trade Discount.
branches of accounting
web accounting
sales tax accounting
asset accounts
accounting companies
valuation accounting
amortization accounting
investment accounting
accounting loss
equity accounting
accounting accrual
corporate accounting
payroll accountant
accounting outsourcing
partnership accounting
Subscribe to:
Posts (Atom)
