Professional Documents
Culture Documents
Internal Liabilities: - All amounts which a business entity has to pay to the
proprietor.
External Liabilities: - All amount which a business entity has to pay outsiders
Liabilities may be further classified into two parts as under: 1) Non-Current Liabilities: - Those liabilities which fall due for payment in a
relatively long period.
2) Current Liabilities: - Those liabilities which are to be paid in near future.
Assets may be classified into the following categories: 1. Non-Current Assets: - Those assets which are held for continued use in the
business.
Fixed Assets are further classified into:
a) Tangible Assets: - Those assets which can be seen and touched.
b) Intangible Assets: - Those assets which do not have a physical existence.
2. Current Assets: - Those assets which are meant for sale or which the management
would want to convert into cash within one year.
3. Fictitious or Nominal Assets: - Assets which cannot be realized in Cash or no
further benefit can be derived from these assets.
8. Capital Receipts and Revenue Receipts: Capital Receipts:
i)
Revenue Receipts:
i)
10. Expenses: - Cost incurred in producing and selling the goods and services.
11. Income: - Surplus of revenue over expenses is called Income.
Income = Revenue Expense
12. Profit: - Excess of total revenue over total expenses of a business.
13. Gain: - It is a monetary benefit, profit or advantage resulting from events which are
incidental to business.
14. Loss: - It conveys the result of the business for a period when total expenses exceed
the total revenues. Some fact or activity against which firm receives no benefit.
15. Purchases: - The term Purchases is used only for the purchase of Goods in which
the business deals.
Purchase Returns: - When purchased goods are returned to the suppliers
16. Sales: - Sales means transfer of ownership of goods or services to customers for a
price.
Sales Returns: - Some customers might return the goods sold to them. These are termed
as sales returns or returns inwards.
17. Stock or Inventory: - The value of those goods which are lying unsold at the end of
accounting period.
18.