Financial Accounting

Thursday, 2 January 2014

Admission Fee:

The amount which is paid by a new member at the time of entering in addition of his subscription.

Administative Expenses:

Expenses which are related with the office or administration e.g office salaries, office rent, entertainment, travelling & conveyance etc.

Abnormal Loss:

Loss which is not due to normal reasons. e.g Loss by fire, flood, theft, etc.

Allowances for Uncollectable or Doubtful Debts:

The provision, which is maintain for noncollectable debts in future is known as provision or allowances for doubtful or uncollectable debts.

Some time during recording the transactions in original books of accounts some mistake occurs, to make correct these record of a transaction which has not be entered or which has been entered but in an incomplete or wrong way adjustments are made.

Accounting Cycle:

Transaction Journal Ledger Trial Balance Final Accounts

Adjusting Entries:

When final accounts are prepared, some items of income and expenses require adjustments. e.g prepaid expenses, accrued expenses, unearned income, accrued income etc. These adjustments are necessary to draw accurate profit.

Accommodation Bills:

Accommodation bills are drawn and accepted without any sale or purchase of goods, the main purpose of accommodation bills are to provide financial help to one party or both parties.

Accounts:

Account is the individual record of Assets, Liabilities, Expenses, Income and capital in a summarized manner.

Accounting Period Concept:

According to this concept the life of the business is divided into series of relatively short accounting periods of equal lengths just to know the results of the business for specific period.

Capital

The amount invested by the owner in the business is called Capital.

Cash Discount

It is the deduction which is given by the creditor to the debtor, if the amount is paid before the due date. e.g a buyer bought some commodity of US$ 100 from the seller and seller offer him 2% discount if the buyer pay him within 10 days from the buying date and buyer pay his dues to the seller within 10 days the seller settle his account with US$ 98 and US$ 2 will be the amount of Cash Discount

Wednesday, 1 January 2014

Accountancy

The accountancy is far extensive than book keeping. In Book keeping only transactions are recorded in original books of business while in accountancy these records are analyzed by professional accountant. e.g whether business earns profit or face loss, what is financial position of the business, what is net profit ratio to assets etc.