ACCOUNTING

TERMS

accounting principles

The standards, rules, guidelines, and industry-

specific requirements for financial reporting.

generally accepted accounting

principles (GAAP)

The general guidelines and principles,

standards and detailed rules, plus industry

practices that exist for financial reporting.

Often referred to by its acronym GAAP

Entity

An economic unit that performs economic activities (Eg. Reliance Industries, Raymonds)

EventHappening to an entity (Eg Recruitment of

employees)

TransactionIs an exchange in which each participant receives or

sacrifices value

Assets

Any thing of use in future operations &

belonging to organization.

RevenueMonetary value of goods & services sold

Expenses/Cost

Expenses incurred to earn revenue

Loss

It can be explained in two different meanings

When expenses > Revenue

&

Those affords that fails to earn revenue

Owner

Person who invest his money & bears the risk

of the business

DrawingsMoney or value of goods belonging to business

used by owner for his personal use

Goods

All commodities which are purchased for

selling in the usual course of business

Sundry DebtorsFrom whom amounts are due for goods sold or

services rendered

Sundry CreditorsAmount owed by the enterprise on account of

goods purchased or services rendered

accounts receivable

A current asset resulting from selling goods or

services on credit (on account).

Accounts Payable

A current liability resulting from purchase of

goods or services on credit

bad debts expense

This is an operating expense resulting from

making sales on credit and not collecting the

customers' entire accounts receivable

balances

balance sheet

One of the main financial statements. The

balance sheet reports the assets, liabilities.

Also referred to as the Statement of Financial

Position.

wages

The compensation earned by employees who

are paid on an hourly basis. It is common for

production workers to earn wages, since they

are usually paid via an hourly rate

salary

The compensation usually associated with

executives, managers, professionals, office

employees, etc. whose pay is stated on an

annual or on a monthly basis. (On the other

hand, "wages" is usually associated with

employees whose pay is stated on an hourly

basis.)