BASIC ACCOUNTING TERMS
Goods :Items in which a business deals regularly with the aim of
earning profits. These are items for resale.
For eg : A furniture dealer buying timber, iron nails, mica, foam,
fevicol etc, to manufacture furniture.
Purchases: Purchases means purchase of goods and services, in cash
and on credit.
Purchase Returns/ Return Outwards: Return of goods purchased on
credit, due to damage, not upto the sample, bad packaging etc.
Net Credit purchases = Credit Purchases – Purchases Returns
Net Purchases = Cash Purchases + Net credit Purchases
Sales: Sale of goods and services, in cash or on credit.
Sales Returns/ Return Inwards: Return of goods sold on credit due to
not upto the order, bad packaging, goods damaged in transit etc.
Net credit Sales = Credit Sales – Sales returns
Net Sales/ RFO = Cash Sales + Net credit Sales
Net Sales is also known as Revenue from Operations (RFO)
Expenditure : money spent to acquire some asset, goods or services,
or some benefit.
1. It either It has no affect on assets or
Increases Non Current Assets liabilities
or
Decreases Non Current
Liabilities
2. It involves large amount It involves small amount
3. It provides benefit for long It provides benefit for short
term term
, 4. It is non repetitive in nature It is repetitive in nature
5. For eg: Purchase of Land & For eg: payment of interest
Building, Furniture, Plant & on loan, payment of rent,
Machinery, repayment of loan wages, salaries, telephone,
etc. stationary, advertising etc.
Receipt: It is the amount received or receivable for selling assets,
goods or services.
Capital Receipt Revenue Receipt
1. It either It has no affect on assets or
Decreases Non Current Assets liabilities
or
Increases Non Current
Liabilities
2. It involves large amount It involves small amount
3. It provides benefit for long It provides benefit for short
term term
4. It is non repetitive in nature It is repetitive in nature
5. For eg: Sale of Land & For eg: sale of goods,
Building, Furniture, Plant & interest received, rent
Machinery, sale of Investments, received, dividend received
proceeds of loan, issue of etc.
shares, debentures, etc.
Non Current Assets(Fixed Current Assets
Assets)
1. They are purchased for use in They are meant for resale.
the business are not meant for
resale.
2. They generate revenue for Generate revenue for short term
Goods :Items in which a business deals regularly with the aim of
earning profits. These are items for resale.
For eg : A furniture dealer buying timber, iron nails, mica, foam,
fevicol etc, to manufacture furniture.
Purchases: Purchases means purchase of goods and services, in cash
and on credit.
Purchase Returns/ Return Outwards: Return of goods purchased on
credit, due to damage, not upto the sample, bad packaging etc.
Net Credit purchases = Credit Purchases – Purchases Returns
Net Purchases = Cash Purchases + Net credit Purchases
Sales: Sale of goods and services, in cash or on credit.
Sales Returns/ Return Inwards: Return of goods sold on credit due to
not upto the order, bad packaging, goods damaged in transit etc.
Net credit Sales = Credit Sales – Sales returns
Net Sales/ RFO = Cash Sales + Net credit Sales
Net Sales is also known as Revenue from Operations (RFO)
Expenditure : money spent to acquire some asset, goods or services,
or some benefit.
1. It either It has no affect on assets or
Increases Non Current Assets liabilities
or
Decreases Non Current
Liabilities
2. It involves large amount It involves small amount
3. It provides benefit for long It provides benefit for short
term term
, 4. It is non repetitive in nature It is repetitive in nature
5. For eg: Purchase of Land & For eg: payment of interest
Building, Furniture, Plant & on loan, payment of rent,
Machinery, repayment of loan wages, salaries, telephone,
etc. stationary, advertising etc.
Receipt: It is the amount received or receivable for selling assets,
goods or services.
Capital Receipt Revenue Receipt
1. It either It has no affect on assets or
Decreases Non Current Assets liabilities
or
Increases Non Current
Liabilities
2. It involves large amount It involves small amount
3. It provides benefit for long It provides benefit for short
term term
4. It is non repetitive in nature It is repetitive in nature
5. For eg: Sale of Land & For eg: sale of goods,
Building, Furniture, Plant & interest received, rent
Machinery, sale of Investments, received, dividend received
proceeds of loan, issue of etc.
shares, debentures, etc.
Non Current Assets(Fixed Current Assets
Assets)
1. They are purchased for use in They are meant for resale.
the business are not meant for
resale.
2. They generate revenue for Generate revenue for short term
