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Financial Account 1st

The document outlines key financial concepts including capital, liabilities, assets, and revenue, explaining their roles in business operations. It defines various terms such as owner's capital, working capital, current and fixed assets, and the importance of managing finances. Additionally, it discusses discounts, payables, vouchers, and the significance of accurate financial entries and transactions.

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Soumya Das
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13 views3 pages

Financial Account 1st

The document outlines key financial concepts including capital, liabilities, assets, and revenue, explaining their roles in business operations. It defines various terms such as owner's capital, working capital, current and fixed assets, and the importance of managing finances. Additionally, it discusses discounts, payables, vouchers, and the significance of accurate financial entries and transactions.

Uploaded by

Soumya Das
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Financial account

 Capital: - Capital refers to the amount of money invested in a business


or asset, which is expected to generate income or profits.
I. Owner's Capital (also known as Net Worth): This represents
the owner's equity in the business.
- Initial investments
- Retained earnings (profits reinvested in the business)
II. Working Capital: This refers to the amount of money available
for daily operations, such as:
- Cash
- Accounts receivable (amounts owed to the business)
- Inventory
 Liability: -A debt or obligation owed to others, requiring payment or
settlement. [A debt or amount owed.]
 Assets: - A resource owned or controlled by a business or individual,
expected to generate future economic benefits.
I. Current Assets (short-term): Expected to be converted into
cash within one year or within the company's normal
operating cycle.
II. Fixed Assets (long-term): Expected to benefit the business
over a longer period, typically more than one year.
 Stocks: - A type of security that represents ownership in a company,
giving shareholders a claim on a portion of its assets and profits.
 Services: - Intangible goods or actions provided to customers, such as:
- Consulting
- Professional advice
- Repairs and maintenance
- Transportation
- Insurance
- Financial services
- Healthcare services
 Proprietor: - The owner of a sole proprietorship, a business owned and
operated by one individual.
 Business: - An organization or entity that engages in commercial,
industrial, or professional activities to generate revenue, profits, and
create value for its stakeholders.
 Sells: - To transfer ownership of goods or services to someone in
exchange for money or other compensation.
 Daters: - A specific point or period in time, refers the process of
assigning dates to financial transactions, events, or documents.
 Insolvency: - This means the company lacks sufficient assets to cover its
debts, making it unable to pay its bills, loans, or other financial
obligations on time.
 Drabbling: -
 Revenue: - Revenue is the total amount of income generated by a
business or organization from its normal operations, before deducting
expenses, taxes, or other liabilities.
Revenue = Total amount of money received from customers for goods or
services sold or provided, during a specific period of time
 Cost: - Cost refers to the amount spent or incurred to acquire, produce, or
purchase something.
 Discount: - A discount refers to a reduction in the amount paid for a
product, service, or asset.
i. Trade Discount: a reduction in the selling price of a product
or service, usually offered to wholesalers, distributors, or
large volume customers. Trade discounts are not recorded in
the financial statements.
ii. Cash Discount (or Sales Discount): a reduction in the
amount owed by a customer for prompt payment. Cash
discounts are recorded in the financial statements as a
contra-revenue account, which reduces revenue.
 Reliable: -
 Payable: - Payable refers to the amount of money a business owes to its
creditors for purchases made on credit.
 Voucher: - Vouchers are used to ensure accuracy, completeness, and
validity of financial transactions, and are an important part of a
company's internal control system.
 Entry: - An entry refers to a record of a financial transaction or event in a
company's books of account.
 Transection: - A financial event or occurrence that affects a company's
financial position or performance, such as a sale, purchase, payment, or
receipt of cash or goods.
 Debit & Cradit: - An entry that increases expenses, assets, or dividends.
[ - Debit: "Take from" or "Increase expense]
An entry that increases revenue, liabilities, or equity.
[- Credit: "Give to" or "Increase revenue]
 Accounts: - A specific category or label used to classify and record
financial transactions, such as assets, liabilities, equity, revenues, or
expenses
 Finances: - The management of a company's money and resources.

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