gEICO INSURANCE QUOTESSTATEFARM INSURANCE QUOTESAllState Insurance QUOTES

Basic Accounting Terms - Very Useful Accounting Terminology Used For C.A

Hello friends, Welcome to your blog Tallyprimesolution - Today I am going to tell you Basic Accounting Terms You Need to Know. If you want to make your career in the accounting field like a big firm, Charted Accountant in a company that does the work of Auditing, Accounting. If you want to be like them, first of all you have to understand the accounting rules, what is accounting, what is the meaning of accounting, where is the need for accounting, what are the features of accounting, what is the purpose of accounting, accounting field What is done in, and what is the most important is the difference between manual, accounting and accounting, what is the type of account, what are the branches of accounts, who needs accounting, who is useful to take accounting information Is, what are the benefits of accounting, what are the limitations of accounting, you have to understand accounting to know about all these.

Basic Accounting Terminology & Concepts


Here we will talk about the basic accounting terms today. Here below is a list of basic accounting terms for tally help which will be suitable for working in Tally Prime, Tally Erp 9
Basic Accounting Terms
Basic Accounting Terms

Busniess transaction

What is a business transaction? It is an economic action that changes the financial condition of a business. Whenever we transact in a business, it affects the assets, liabilities and capital of our business, either our Business capital decreases or business capital increases or our business assets decrease, these assets increase or our business obligations decrease or business liabilities increase.

Business transactions are of two types:-

  • Internal 
  • External

Event

what is an event - whenever we conduct a transaction in the business and the result we get as a result

Like- Sachin started the business with a capital of 500000, he bought cash worth four lakhs and sold 3/4 part (of goods) for 380000. He gave 20000 for the rent of the warehouse, then we will call this thing an event

Account

An account is an account in the ledger of all the transactions done with a particular person or in summary of certain things.


Capital

"Capital is the first accounting terminology of any major entity". Capital We speak that the owner of the business has engaged in the business, we can show this capital in the form of cash or property. With the help of this capital invested by the owner, the goods and assets are purchased in the business. We subtract liabilities from assets to find the amount capital.

Capital = Assets - liabilities

- In TALLY ERP 9 or Tally Prime, we will go to the balance sheet and there we will see the capital account on the liabilities side. When we click on the capital account, all the proprietors there are the owners of the business there. If there is one owner, then there will show the name of one owner and if there are two owners, So we show that 2 owner names

Why do we think different business owner to business:-

We understand the business owner as different from the business, why do we think different and we are the business owner who shows it to us in the liabilities side in the capital account - let's know that the business owner wants the capital to be put into the business. So he gets some benefit from it. The owner of the business says that if I invest my capital elsewhere, then I will get profit from there, similarly if I invest capital in my business, then I should get profit over my capital, that's why we think different business owner to business. Is considered different from the business owner. because it becomes a business obligation to pay interest to the business owner on the capital he has invested.

Drawings

When the owner of a business withdraws money from the business for his personal use, it is called Drawings.

Liabilities

Friends, when we talk about Liabilities, when we work on Tally software Or other, then we see the balance sheet there, then the two Sides in the balance sheet show us. Liabilities and Assets. There are four types of liabilities.

  • Internal liabilities
  • Enternal liabilities
  • Non current liabilities
  • Current liabilities
We use basic accounting terms in financial statements, trading accounting, and profit & loss account of any entity.

Assets

Every item of business which is owned by the trader is called Assets OR it also includes money which is to be taken from other persons for business such as in future we will get money from Debtors.

Furniture, Machinary, Building, B / R. All of us have our Assets and we divide them all up into different parts.

Such as - Current assets, non-current assets, tangible assets, Intangible Assets, Fictitious or Nomical Assets

Capital Receipt

It is very important to differentiate between Capital Receipt and Income Receipt. If capital is received then we show towards increase in liabilities or decrease in assets. whereas Revenue Receipt - Business Account and profit show on the Credit side of Profit & Loss (P&L) Account.

Capital Receipts

The following are examples of capital receipts:

(1) Amount received from sale of permanent properties or appropriations, 
(2) Capital received by the owners or partners of the business or by the issue of shares and debentures in the case of the company.
(3) Amount received as loan.

Revenue Receipts


(1) Amount received from sale of goods.
(2) Commission and fees received for services rendered,
(3) Interest and dividend received on appropriations


Expenditure

Any payment made for acquiring property, goods or services or transfer of property or liability is called origination expense. This means that any payment made to get Benefit is called Kharch. Spending can be classified into three parts:
(1) Capital Expenditure and
(ii) Revenue Expenditure and
(iii) Deferred Revenue Expenditure.

Capital Expenditure

Any expenditure which is incurred for purchasing a permanent property or increasing its value is called capital expenditure. Therefore, the expenditure incurred for purchasing or constructing buildings, plant, furniture etc. is capital expenditure. Such expenditure keeps providing benefits for a long time, so it is written in Assets.

Revenue Expenditure 

Any expenditure whose entire benefit is received within an accounting period is called income expenditure. Hence: All the income expenditure is debited to the business and profit and loss account. Such mules do not increase the profitability of the business, but they are helpful in maintaining the current profit-making capacity. These expenses do not create any property that is going to last for a long time.

Deferred Revenue Expenditure

Occasionally some expenses are incurred in business, whose benefits continue to be available for many years to come. Such expenditure is called deferred profit (forward) expenditure. Such expenditure payments are made in this year, but their utility remains for many years (usually 3 to 7 years), so many years of profit and loss accounts do not put the entire burden of such expenses on the current year's profit-loss account. Put on Therefore, such expenditure is estimated to be divided over several years, such as a new firm spending a large amount of money on advertising in the beginning of the year, say 2,00,000 and estimating the benefit of this advertisement to further the business. Will be available for 4 years to come. Hence, 50,000 advertisement expenditure will be considered every year for 4 years.

5,000 advertising expenses will be written in the profit and loss account every year and the remaining amount will be written in the status statement in the property side. For example, in the first year position statement, R 1,50,000, second letter 31,00,000 and third year 50,000 will be written.

Expenses

The costs incurred in producing and selling goods or services are called expenses. According to Finney and Miller, "Experimentation for the Revenue." The cost of goods and services incurred is called expenditure.

Expenses include the following

(1) Cost of goods sold.
(2) Rent, commission, salary, advertising expenses etc.
(3) The reduction in the value of the properties due to the use of the assets is also a deficiency or depreciation. Owner's capital decreases due to expenditure.


Income

There is a lot of difference between income and revenue. The total amount received from the sale of goods is called Revenue. Cost of goods sold 'expenditure. (Expense). The amount left after subtracting 'expenditure' from 'proceeds' is called 'income'. For example, if the total sales are T 5,00,000 and the total cost of goods sold is T 4,00,000, then T 5,00,000 will be called proceeds, T 4,00,000 will be called expenditure and the remaining T 1,00,000 will be called income. It can be expressed as follows:

Income = Revenue - Expense

Profit

Profit refers to the excess of Revenues over the total expenses of a business entity during an accounting period. Profit increases the appropriation of the owners business.

Gain

It refers to the monetary gain received as a result of an event or transaction related to the business. For example, profit from the sale of a permanent property, victory in a court case or increase in the value of a property, etc. For example, if a building costing 10,00,000 is sold for 12,00,000, then there is a profit of 2,0,000 from the sale of the building.

Loss

The word loss indicates two different meanings. In the first sense, it denotes the excess of the expenditure of occupation of a particular period. For example, if the proceeds are 2,00,000 and the expenditure is 2,40,000 then there is a loss of 40,000. In a secondary sense, it refers to a fact or activity from which the firm receives no profit. For example, loss from fire, theft or accident etc. It should be remembered that there is a difference between losses and expenses. Expenses are incurred for obtaining proceeds while losses do not yield proceeds. For example, theft of property is a loss, but its loss is an expense.

Purchases

The term purchasing is used only to purchase goods that are traded in that business. In the case of manufacturing institutions, raw material refers to the raw material that will be manufactured and sold. In business entities, goods refers to goods that are purchased for resale. In both cases, the goods are intended for those goods which are purchased to sell at a profit, for example, if a cloth merchant buys clothes, then this cloth will be called goods, but if the merchant of the cloth sits for the customers. If one buys furniture, it will be called Asset rather than goods and a separate 'Furniture' account will be opened for this.

Purchases Returns

When the trader returns the purchased goods, it is called the purchase return. Purchase return is also called Returns outward.

Sales

Sales means the transfer of ownership of goods or services to the customers in exchange for the price. For example, if Tarun sells a computer to Varun, then the ownership of the computer will be transferred from Tarun to Varun and the computer to Tarun. Will have the right to recover the fixed value of Rs. The sale of goods that were bought to sell are called sales. It also includes the Revenue received from providing services. In accounting the term sale is used only for the sale of goods and not for the sale of other goods or properties. For example, if a cloth merchant sells cloth, it will be called sale, but if the cloth merchant sells old furniture or old typewriter. So it will not be called sale.

The term sales includes both cash sales of goods and credit sales.

Sales Returns

When the merchandise sold by the trader is returned, it is called a sales return. Sales return is also known as Return Inwards.

Stock or stock-in-trade

Rahati refers to the goods which have been purchased for re-sale and which remain due to be sold at the end of the year. This stock can be of two types. At the beginning of the year or period the accounts are being created by the institution, the balance is called the opening stock and the last one is called the closing stock.

Inventory of Raw Materials

It includes the inventory of raw materials which were purchased for use in the manufacture of goods but have not yet been used. For example, in the case of a textile mill, the value of cotton kept in stock is the inventory of raw materials.

Inventory of Work in Progress or Partly Finished Goods

This goods are in an order-made condition. To convert it into fully manufactured goods is to do all the construction work. The value of the ongoing work includes the cost of raw materials used, the cost of labor, fuel, power and a proportionate amount of other expenditure. Therefore, their sum is considered to be the value of the inventory of the ongoing work. In the case of a textile mill, the value of yarn and non-fabric made in the stock is the inventory of the current work.

Inventory of finished goods

In the case of a textile mill, the value of the cloth kept in stock is the inventory of the finished product.

Calculation of last inventory

To calculate the value of the last inventory, a list is made of all the goods kept in the warehouse along with their quantities. Separate lists of raw materials, semi-finished goods, finished goods and stock should be made in the warehouse.

The goods manufactured should not be included in the inventory: - 
(I) The goods which have been sold till the date of expiry of the year but have not been sent to the buyer. (II) Purchased goods which have arrived. But it is not written in the purchase book.

The goods executed should be included in the list of inventory- 
(1) Goods which have been sent to the customers on the condition of sale or return. 
(2) Goods that have been sent to agents for sale but have not been sold till the last day of the end of the year.

Difference between stock and inventory:

Stock refers to the value of only those goods that have been purchased for resale and which remain unsold at the end of the accounting period. While inventory is a broad term that includes stock. Thus, the inventory consists of:-

(i) Inventory of Raw Material
(ii) Inventory of Semi-Finished Goods
(iii) Inventory of Finished Goods
(iv) Inventory of Stock

Trade Receivables

Trade receivables means that amount. Which is recceivable during the normal operation of the business in connection with the sale of goods or services rendered by the company.

Trade receivables include both Debtors and Bills Receivables.

Debtors

The term 'debtor' is used to refer to individuals or firms who have sold debt and who have not paid. They still have to give us some 1. As if Mohan was sold a loan of 50,000. Till Mohan pays the full amount, he will be called the 'debtor' of the businessman.

Bills Receivables

An exchange letter is called a receivable bill for the person who writes it and gets it back after it is accepted by the acceptor. Hence the term receivable bill is used for exchange letters that are written on debtors. Or are obtained from them by endorsement. The amount written in such a bill is receivable at a certain future date.

Trade Payables

Trade liability is the amount related to the amount payable in connection with the purchase of goods or services under normal business activities of the business. These include both Creditors and Bills Payables.

Creditors

The term 'creditor' is used for individuals or firms from whom borrowed goods have been purchased but have not been paid. The firm still owes him a few rupees. For example, a loan of 20,000 was purchased from Govind. In such a situation, he will be called the 'creditor' of the firm until the entire rupee is repaid.

Bills Payable

An exchange letter is called a bill payable to the person who accepts it and accepts it and returns it to the drawer. Hence the term payable bill is used for exchange letters that are accepted in favor of creditors. In such a bill, the written amount is payable on a certain date in the future.

Goods

Goods include all items which are purchased for resale or used in manufactured goods to be ready for sale. For example, for a furniture dealer, buying chairs and tables would be considered as 'mother' whereas for other traders it is furniture and it will be sold as property. Similarly, for a stationery practitioner, stationery is goods while for others it is expenditure.

Cost

The amount of resources given in lieu of obtaining any goods or services is called cost. The given instrument can be either a currency or other means expressed in a currency. The Chartered Institute of Management Accounts, London, defined the term cost as, "Cost is the amount of expenditure (actual or ideological) that is incurred on a certain object or action." For example, the cost of machinery will also include the purchase price of the machinery, the freight and the expenses for its installation. A certain thing or action can be an object, service or any other action. The amount spent can also be actual or notional. Just like the amount spent on raw materials is the actual expenditure, whereas the ideological expenditure is called that which is not actually paid but it is still considered an expenditure. Such as rent of own factory, interest on own capital etc.

Voucher

A certifier is a form which confers the right of payment and on the basis of which business transactions are first recorded in the accounting books, a separate certifier is prepared for each transaction. Which makes it clear which account is to be debited and which credit. The certifier has all the firms printed separately for their business, so the format of the certifier is also different in all the firms. Authentic accountant. (Accountant) and serial number is written on each certifier and signed by an authorized person of the firm.

Discount

This is a discount given by a seller to the buyer. It is of two types :

Trade Discount

When a seller gives his customers a certain percentage discount on the list price of goods, it is called a trade discount. There is no entry in the books of account of this exemption as it is deducted from the total value in the invoice or cash memo.

Cash Discount

When customers are given a discount to pay at an early or fixed time, it is called a cash discount. For example, if a seller gives a 2% discount on payment in a week, it will be called a cash discount. The entry of this code is done in Pusco.

Other important accounting terms:

Entry

When a transaction or event is accounted for in the accounting books, it is called an entry.

Bad Debts

This is the amount from which the possibility of getting from the debtor has expired. It is a commercial loss and is debited to a profit-and-loss account as an expense. is.

Insolvent

A person or institution which is not in a position to repay its debts, is said to be insolvent.
(28) Solvent: - A person or organization which is in a position to repay its debts, is said to be competent.

Stores

The term store is used for material which is kept by an organization not for resale but for business use only. Examples of this are: lubricants and grease, spare parts for machinery, packing materials, etc.

Revenue

In accounting, income refers to income from any source that is regularly received. This includes the amount received from the sale of goods and the amount received from providing service to customers. Similarly, it also includes the amount received from rent, commission, dividend, interest etc. Income from income is related to the day-to-day activities of the business and should be of regular nature. Therefore, the amount received from the capital or loan levied by the business owner is not proceeds.

Entity

Unit or business unit means an entity established to make a profit by providing services or selling goods (eg LG Electronics, Wipro, Maruti Suzuki etc. )

Turnover

It refers to the total number of sales made in a particular period.

Live stock

Pets, horses etc. are called livestock.

Investments

Appropriation refers to putting money in companies' shares or debentures for the purpose of making a profit.

If you want to learn accounting, then this is Part 1 of accounting terminology. This is the accounting terminology of Class 11th. Which will help you in accounting to a great extent. Meaning of accounting ( The foundation of accounting is called accounting terminology ) The biggest software on which accounts work is done by keeping some of these accounting basic terms in mind. 
Post a Comment (0)
Previous Post Next Post