Terminologies of accounts and a question

A ppt on terminologies of accounts

1. FINANCIAL ACCOUNTING (Assignment) Submitted To- Submitted By- Prof. Ramanjeet Singh Jolly Group 5

2. CHITKARA UNIVERSITY Chitkara Business School Assignment of Financial Accounting Topic – 1. Terminology of Accountancy 2. Financial Statement of N.P.O.

3. Receipt To Balance b/d To LMF To Entrance Fees To Subscription a/c – • Previous Year 17500 • Current Year 250000 • Next Year 32500 Amount 75,000 1,00,000 25,000 3,00,000 Payment By Wages a/c By News paper a/c By Insurance a/c By Donation a/c By Library a/c By Furniture a/c By Balance c/d Amount 62,500 12,500 37,500 25,000 1,50,000 1,12,500 1,00,000 Question:- Prepare Final accounts for M/s TEECEE Enterprises for the year 2023-24 Dr. Cr. Receipt & Payment Account Adjustments Opening Value of book on 1 st April, 2023 was 50000 and its closing value on 31 st March, 2024 is 125000 Capitalise Entrance fees and LMF @ 30% Outstanding Salaries 5000 There are 2000 members in club and each pay 150 for subscription -> Subscription due for previous year was 32500

4. Solution:- TEECEE Club OPENING BALANCE SHEET For the year 01-04-2023 Liabilities Capital Amount 157500 157500 Assets Cash In hand Subscription 17500 + Due Subs. 15000 (Last Year) Opening Stock of Books Amount 75000 32500 50000 157500

5. Income and Expenditure a/c For the year ended 31.03.24 Expenditure To Wages a/c To Newspaper a/c To Insurance a/c To Donation a/c To Salaries a/c To Depreciation on books a/c To excess of Income over expenditure i.e. Surplus Amount 62,500 12,500 37,500 25,000 5,000 75,000 170,000 3,87,500 Income By subscription of Current Year 250000 +Earned Subs. 50000 By LMF By Entrance Fee 25000 (-) 30% recurring (7500) Amount 3,00,000 70,000 17,500 3,87,500

6. Liabilities Capital 1,57,500 (+) Surplus 1,70,000 LMF 1,00,000 (-)70% recurring (70,000) Entrance Fees Outstanding Salaries Unearned Subscription Amount 3,27,500 30,000 7,500 5,000 32,500 4,02,500 Assets Furniture Closing Cash Earned Subscription (C.Y.) Earned Subscription (L.Y.) Library 1,50,000 (+)Opening Value of books 50,000 2,00,000 (-)Depreciation (75000) Amount 1,12,500 1,00,000 50,000 15,000 1,25,000 4,02,500 CLOSING BALANCE SHEET As at 31.03.2024

7. Terminologies of Accounts 1. Proprietor :- The owner of business is called as Proprietor 2. Transaction :- All activities of a business are known as Transaction 3. Accounting :- Accounts is written record of all transaction of the business 4. Financial Accounting :- It focuses on the financial statements by preparation of Financial Reports like - Income Statement - Balance Sheet - Cash Flow 5. Balance Sheet :- The balance sheet is a financial statement that provides a snapshot of a company’s financial position at a specific point of time is called a Balance Sheet. 6. Income Statement :- The income statement, also knows and the profit and loss statement and it summarises a company’s revenues, expenses, gains, and losses over a specific period of time is called as Income statement 7. Cash Flow statement :- The cash flow statement tracts the inflow and outflow of the cash within a company during specific period of time. 8.Bad debts: When the due amount of debtors become irrecoverable. It is recorded as a loss.

8. 9.Financial ratios :- Financial ratios are the calculations that provides insight into a company financial performance and health are called financial ratios. 10.Profitability :- Profitability refers to company ability to generate profit relative to its expenses and costs. 11. GAAP :- Generally Accepted Accounting Principles 12. Solvency :- Solvency refers to company ability to meet its long term financial obligations. 13. Assets :- Assets are the resources owned by the company that have economic value and can provide future benefits.eg. Land, Inventory,trade receivables etc. 14.Liabilities :- Liabilities are the debts that company or business owes to other parties. 15.IFRS :- International Financial Reporting Standards 16.Drawings :- Goods or cash withdrawn by owner of the business for its personal use is known as drawings.

9. 17. ACCA :- Association of Certified Chartered Accountants 18. Octroi :- The toll or barrier charges are known as octroi. 19. Livestoc k :- The term used for all animals in the business is known as livestock.. 20. Unexpired expenses :- Expenses that are paid in advance are called as prepaid expenses like prepaid rent, prepaid telephone bill etc. 21. Carriage :- Delivery charges are known as carriage. 22. Carriage inwards :- Delivery charges on purchases is known as carriage inwards. It is recorded in trading account. 23. Carriage outwards :- Delivery charges on sales is known as carriage outwards. It is recorded in profit and loss account . 24.Equity : - It refers to ownership interest in a company.

10. 25.Goodwill :- Market reputation of Business is known as goodwill. It is an intangible asset. 26 Freight :- Transportation charges are known as freight. It is recorded in trading account. 27.Accounts Receivable :- Accounts receivable refers to the amounts owed to a company by its customers for delivered or services provided on credit. 28.Accounts Payable :- Accounts payable refers to the total amount owed by the business to a company that supplies for goods or services received on credit. 29 Revenue :- Revenues refers to the total amount of income generated by a business from its primary activities like sales of goods and services. 30. Sales :- Sales Specifically refers to the revenue generated From sale of goods or services. 31. Depreciation : - It is systematic allocation of cost of fixed asset over its useful life. It is decrease in value of asset due to wear and tear. 32. Investments :- Buying shares, debentures, bonds basically to invest in stock market.

11. 33. Return Inwards :- Sales Return is known as return inwards. It has DR. balance. 34. Return Outwards :- Purchases Return is return outwards. It has CR. Balance. 35. Amortization :- It refers to the process of spreading cost of intangible assets over their useful life. 36. Interest Expense :- Interest expense represents the cost of borrowing funds or interest paid on outstanding debts . 37. Non Operating Income :- It refers to income generated from activities that are not directly related to company’s core operations. 38. Non Operating Expenses :- It refers to expenses incurred from activities not directly related to company’s core operations. 39. Capital :- Capital refers to financial resources, such as money or assets invested in a business by it’s owners. 40. Dividends :- Dividends are the distribution of Profits or earnings to shareholders of a corporations. 41. Accrued Income :- Income earned but not yet received . It is also called earned income.

12. 42. Unearned Income :- Income received but not yet earned. It is income received in advance. 43 . Outstanding expenses :- Expenses that are due or yet to be paid . 44. Cost of Goods sold (COGS) :- It is an accounting term that describes the expenses incurred to produce goods or services that a business sells. They are direct cost. 45. Insolvency :- :-Insolvency is when a business or individual cannot meet the debt obligations with lenders. 46. Auditors :- Professionals who assess a company’s financial position by examining the accuracy of it’s accounting records. 47. Chartered Accountant :- It works in all fields of business and finance including auditing, taxation, financial and general management. 48. Credit :- This entry can make a company’s liabilities or assets smaller. 49. Debit :- This is opposite of credit. When business gets paid back its assets group. When a company pays a debt. Its liabilities go down. 50. Journal :- It is running record of all business financial transactions.

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