terminology m.a

8/2/2019 Terminology M.a.

1/32

EntryEntry

____________________________

means record ameans record a

transaction in book oftransaction in book of

account. In accountaccount. In accountevery entry has twoevery entry has two

effects, one debiteffects, one debit

effect and other crediteffect and other credit

effect.effect.


2/32

TransactionTransaction

__________ is an exchange of__________ is an exchange of

goods, services, and cashgoods, services, and cash

between persons. There arebetween persons. There are

two types of transactions,two types of transactions,

economical (financial) & non-economical (financial) & non-

economical (non-financial).economical (non-financial).

Only economical transactionsOnly economical transactions

are recorded in books ofare recorded in books of

account.account.


3/32

VoucherVoucher

Document whichDocument which

support the businesssupport the business

transaction, whichtransaction, which

has been entered inhas been entered inthe book of account.the book of account.

BillsBills

InvoiceInvoice


4/32

DebitDebit

_________ means_________ means

receivable or thingreceivable or thing

owned.owned.

Suggest the benefit isSuggest the benefit isreceived.received.

Receiver of benefit isReceiver of benefit is

debited.debited.

Paid Telephone BillPaid Telephone Bill

Rs. 1000.Rs. 1000.

Purchased Plant &Purchased Plant &

Machinery worth Rs.Machinery worth Rs.1,00,000.1,00,000.

ABC ltd. buys theABC ltd. buys the

good on credit fromgood on credit from

XYZ ltd., worth Rs.XYZ ltd., worth Rs.

1000010000


5/32

CreditCredit

_________ means_________ means

give.give.

Suggests that theSuggests that the

account has given theaccount has given thebenefit.benefit.

An account whichAn account which

give the benefit isgive the benefit is

credited.credited.

Received Interest &Received Interest &

Dividend.Dividend.

Capital of theCapital of the

business.business.ABC ltd. buys theABC ltd. buys the



1000010000


6/32

JournalJournal

A book in whichA book in which

double entry isdouble entry is

made. A transactionmade. A transaction

when takes place,when takes place,immediately enteredimmediately entered

in this book.in this book.


7/32

Subsidiary bookSubsidiary book

Separate journals areSeparate journals are

kept for particularkept for particular

types of thetypes of the

transaction, which istransaction, which iscalled as Subsidiarycalled as Subsidiary

book. E.g., purchasebook. E.g., purchase

book, cash book, etc.book, cash book, etc.


8/32

AccountAccount

__________ is a__________ is a

summarized record of thesummarized record of the

transaction at one placetransaction at one place

relating to one person,relating to one person,

one kind of property orone kind of property orone class of expenses orone class of expenses or

incomes.incomes.


9/32

LedgerLedger

It is a main book ofIt is a main book of

account. In thisaccount. In this

book all accountsbook all accountsare preparedare prepared

separately.separately.


10/32

BalanceBalance

Difference betweenDifference between

the total of debit sidethe total of debit side

and credit side of anand credit side of an

account opened in aaccount opened in aledger for a specifiedledger for a specified

period is calledperiod is called

____________________


11/32

GoodsGoods

__________ are__________ are

those productsthose products

which arewhich arebought/produced bybought/produced by

businessman forbusinessman for

resale to makeresale to make

profit.profit.


12/32

StockStock

_________ is the_________ is the

balance of goodsbalance of goods

which remainswhich remains

unsold.unsold.


13/32

DebtorDebtor

Person who owesPerson who owes

debt to business.debt to business.

Which means fromWhich means from

whom we have towhom we have totake money.take money.

If goods are sold to aIf goods are sold to a

person on credit, thenperson on credit, then

the person is a debtorthe person is a debtor

for us.for us.




1000010000


14/32

CreditorCreditor

________ is a person________ is a person

to whom debt is owedto whom debt is owed

by business.by business.

__________ is a__________ is aperson to whom weperson to whom we

have to pay money.have to pay money.




1000010000


15/32

LiabilityLiability

They are the debtThey are the debtwhich a businesswhich a businessowns to others.owns to others.

The amount payableThe amount payableby business for goodsby business for goodspurchased or for loanpurchased or for loantaken for servicestaken for servicesrendered to therendered to thebusiness.business.

DebentureDebenture

ProvisionsProvisions

Unsecured LoansUnsecured Loans

Current *********Current *********

ContingenciesContingencies

Liabilities = Assets - Capital


16/32

AssetsAssets

__________ are all__________ are all

those things or rightsthose things or rights

which are owedwhich are owed

business and havebusiness and havemonetary value.monetary value.

These are propertiesThese are properties

which help to run thewhich help to run the

business.business.

Fixed AssetsFixed Assets

InvestmentsInvestments

Current AssetsCurrent Assets

Advances & LoansAdvances & Loans

MiscellaneousMiscellaneous

Expenditure.Expenditure.


17/32

Fixed assetsFixed assets

_________ are those_________ are those

which are notwhich are not

purchased for resale,purchased for resale,

which help running ofwhich help running ofthe business andthe business and

whose benefit iswhose benefit is

available for a longavailable for a long

time.time.

P&MP&M

LandLand

GoodwillGoodwill

PatentPatent

copyrightcopyright


18/32

Current assetsCurrent assets

__________ are__________ are

those assets whichthose assets which

are constantlyare constantly

converted into cashconverted into cash Other assets whoseOther assets whose

values go onvalues go on

changing every daychanging every day

DebtorDebtor

StockStock

CashCash

Bank BalanceBank Balance

Bills ReceivableBills Receivable


19/32

Tangible assetsTangible assets

__________ assets__________ assets

have a physicalhave a physical

existence.existence.

Which can see andWhich can see andtouch.touch.

P&MP&M

LandLand

Furniture & FixturesFurniture & Fixtures


20/32

Intangible assetsIntangible assets

____________ not____________ not

physical existence butphysical existence but

it has a monetaryit has a monetary

value.value.

GoodwillGoodwill

PatentPatent

CopyrightCopyright

TrademarkTrademark


21/32

CapitalCapital

Amount invested byAmount invested by

the proprietor in athe proprietor in a

business isbusiness is

called_________called_________

Dhirubhai started hisDhirubhai started his

business with Rs.business with Rs.

5000.5000.


22/32

DrawingDrawing

Value of cash orValue of cash or

goods or any othergoods or any other

assets withdraw fromassets withdraw from

business by abusiness by aproprietor for hisproprietor for his

personal or domesticpersonal or domestic

use.use.

Mr. Patel submits Rs.Mr. Patel submits Rs.

1,00,000 as donation1,00,000 as donation

for getting admissionfor getting admission

of his son in VTCBB.of his son in VTCBB.


23/32

SolventSolvent

A person is saidA person is said

________ when his________ when his

assets are more thanassets are more than

his liabilityhis liability

Assets > LiabilityAssets > Liability


24/32

InsolventInsolvent

A person is saidA person is said

________ when his________ when his

assets are less thanassets are less than

his liabilityhis liability

Assets < LiabilityAssets < Liability


25/32

ExpenseExpense

________ is the________ is the

money spend formoney spend for

conducting aconducting a

business.business.

Telephone billTelephone bill

Electricity billElectricity bill

SalarySalary

WagesWages

DepreciationDepreciation


26/32

Revenue ExpenseRevenue Expense

_________ expense_________ expense

incurred for day toincurred for day to

day.day.

Eg. SalaryEg. Salary RentRent

Insurance premiumInsurance premium


27/32

Capital expensesCapital expenses

_________ expense_________ expense

result into acquisitionresult into acquisition

of assets.of assets.

LandLand

P&MP&M

FurnitureFurniture

Preliminary ExpensesPreliminary Expenses


28/32

Bad DebtsBad Debts

If out of the amountIf out of the amount

receivable, somereceivable, some

amount is notamount is not

received, from debtorreceived, from debtorthen it is loss of thethen it is loss of the

business.business.

ABC ltd. Who boughtABC ltd. Who bought

goods on credit worthgoods on credit worth

Rs. 10,000, has beenRs. 10,000, has been

declared insolventdeclared insolventand there are noand there are no

scope to receivescope to receive

those money back.those money back.


29/32

DiscountDiscount

If the businessmanIf the businessman

agree to receiveagree to receive

some amount lesssome amount less

than the printed pricethan the printed priceof the amount show inof the amount show in

the invoice, thethe invoice, the

difference is calleddifference is called

__________________

On cash purchase ofOn cash purchase of

goods worth Rs.1000,goods worth Rs.1000,

the seller chargedthe seller charged

only Rs. 950 only.only Rs. 950 only.


30/32

Gross profitGross profit

When the sales areWhen the sales are

more than themore than the

purchase price of thepurchase price of the

goods plus purchasegoods plus purchaseexpense, thenexpense, then

difference is thedifference is the

__________________

Trading AccountTrading Account

Sales Cost of SalesSales Cost of Sales


31/32

Net profitNet profit

_______ is a surplus_______ is a surplus

left after deducting allleft after deducting all

expenses from grossexpenses from gross

profit and addingprofit and addingother incomes to itother incomes to it

Profit & Loss AccountProfit & Loss Account


32/32

terminology m.a

Documents