Explain the basic terms used in accounting?

ICSE Class 9 Answered

Explain the basic terms used in accounting?

Asked by vishalkumargupta880802 | 16 Jan, 2019, 10:19: PM

Expert Answer

Basic Terms in Accounting

Transactions: A transaction is an economic event in a business which involves transfer of money or goods or services such as purchase/sale of goods and services, wages paid to workers, rent paid, dividend received, lending and borrowing money.
Capital: Capital is the amount invested by the proprietor in a business. If the business earns profit or invest additional amount, the amount of capital increase in the business.
Proprietor: A person who owns a business and contributes capital to the business to earn profit is called proprietor.
Assets: Assets are the properties of business used for its operation. It can be classified into fixed assets and current assets.
Liabilities: Liabilities refer to the financial obligations or debt which a business owes to others such as loans from banks, other persons or creditors for goods supplied.
Drawings: Drawings is the amount of cash or goods withdrawn from the business by the proprietor for personal use.
Debtor: A debtor is a person who receives a benefit without paying money immediately but liable to pay in future within a particular period of time.
Creditor: A creditor is a person who gives a benefit without receiving money immediately but to claim it in future.

Answered by Tharageswari S | 17 Jan, 2019, 09:20: AM