More Accounting Terms
Bills receivable is a credit instrument accepted by the debtor, against which the payment is to be received by the business on a future date.
Bills payable is a credit instrument accepted by the business, to be paid on a future date.
Depreciation is the permanent, gradual, decrease in the book value of a fixed asset due to its normal and continuous use.
Appreciation is the increase in the book value of assets.
Bad debts Debtors becoming irrecoverable become bad debts.
Insolvent Person not in a position to repay his liabilities is said to be insolvent.
Account is the summary of transactions relating to a particular item of the business.
Transaction is the event affecting the position of goods, services and assets, liabilities and capital.
Transaction may be:
Cash transaction affects the position of cash/ bank balance of the business i.e. increasing or/and decreasing cash or/and bank balance.
e.g. purchased goods for cash, sold goods payment received by cheque.
Credit transaction creates debtor-creditor relationship.
e.g. sold goods to Ankit on credit payment will be received after two months.
Non-cash Transaction affecting the business but not affecting the cash/bank/debtor/creditor etc.
e.g. charging depreciation on building, appreciation in the value of land.
Stock Goods remaining unsold are called stock or inventory.
e.g. furniture, cement, garments.
Outstanding expenses are the expenses due but not paid.
e.g. salaries outstanding, wages outstanding.
Prepaid expenses are the expenses paid in advance.
e.g. salaries prepaid, wages prepaid.
Accrued income is the income that has been earned but not received.
e.g. accrued commission, rent accrued.
Income received in advance is the income which has not been earned but has been received.
e.g. rent received in advance, commission received in advance.
Trade discount is the discount on quantity of sales or purchases.
Cash discount is the discount to encourage early payments/collection.
Objectives and Limitations of Accounting
Basic Accounting Terms
This video explains the Basic Accounting Terms i.e. Accounting Terminology for Beginners
▶ Watch this video on YouTube
Now, try to Classify these Terms:
How to play this game?
You just have to drag the item to the selected category and tap there, it will show instant reaction, smiley if your selection is correct otherwise arrow will turn with red lining. After all selections, you get the score.
Accounting Principles and Concepts