(24) Basic Accounting Terms
(1)
Business Traisserion:
A business transaction in an economic
activity of the business that changes, its financial position. Whenever any
business transaction takes place, it result in a change in the value of the,
liabilities or capital.
Features/Characteristics of a Business Transaction
1. It is concerned with money or
money's worth of goods or services,
2. It arises out of the transfer or
exchange assets of goods or services.
3. It brings about a change in the
financial position.
4. It has an effect on accounting
equitation.
5. It has dual aspect or two sides -
'receiving' (Debit) and 'giving' (Credit).
(2)
Event
An event is the result of a
transaction.
For example: Selling price of goods 4,
00,000
Cost price of goods is 3, 50,000
Profit = 4, 00,000 - 3, 50,000 =
50,000
Event is Profit of Rs. 50,000
(3)
Account:
"An account is a ledger record
in a summarised of all the transactions that have taken place with the particular
person or things specified". Carter
Account is a summarised record of
transactions relating to a particular person or item. It records not only the
amount of transaction but also their effect and direction. The place where such
a record is maintain is termed as an account
(4)
Capital:
Capital is the amount invested by the
proprietor in a business enterprise. Amount may be in the form of cash, goods
or assets. It is a liability of the business towards the proprietor which
increases with further investment made in the business and the amount of profit
earned. Capital is also known as Owner's Equity or Net Worth. It is always
equal to assets less liability. It can be expressed as:
Capital
= Assets - Liability
(5)
Drawings
Any cash or value of goods is run by
the owner for personal use or any private payments made out of business funds
are called Drawing.
