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MAIN ACCOUNTING TERMS

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MAIN ACCOUNTING TERMS
Before going ahead you must have knowledge of accounting terminology,
which is, used daily in business world.
1. Capital - It is the amount invested by the proprietor in the firm. For
the business it is liability towards the owner.
Capital = Assets Liabilities.
2. Asset Assets are things of value owned. In other words anything,
which will enable the firm to get cash or a benefit in future, is called
asset. Money owing by debtors, stock, cash, furniture, machinery,
buildings etc. are a few examples of assets.
3. Liability It is the amount, which the firm owes to outsiders
Liability = Assets Capital
4. Revenue It is the amount, which is added to the capital as a result of
operation. Receipts from sale of goods, rental income etc. are a few
examples of revenue.
5. Expense It is the amount spent in order to produce and sell the goods
and services which produce the revenue. Some examples of expenses
are salaries, wages, rent, etc.
Income = Revenue Expense.
5. Purchase Cash and Credit purchases of goods.
6. Sale Cash and Credit sales of goods.
7. Stock Stock includes goods lying unsold on a particular date.
8. Debtors A person who owes money to the firm.
9. Creditor A person to whom the money owes by the firm.
10. Proprietor The person who makes the investment and bears all the

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MAIN ACCOUNTING TERMS Before going ahead you must have knowledge of accounting terminology, which is, used daily in business world. 1. Capital - It is the amount invested by the proprietor in the firm. For the business it is liability towards the owner. Capital = Assets – Liabilities. 2. Asset – Assets are things of value owned. In other words anything, which will enable the firm to get cash or a benefit in future, is called asset. Money owing by debtors, stock, cash, furniture, machinery, buildings etc. are a few examples of assets. 3. Liability – It is the amount, which the firm ...
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