Accounting is an important branch of corporate studies that helps in managing an organizations financial activities. There are many divisions in accounting which are responsible for key functioning such as financial accounting and auditing activities of a business, like managing the books, payroll and tax compliance, accounting rates high in providing employment opportunities in recent years. Here are some important terms used in this accounting definition for the benefit of the reader.
Accounting Ratio: It brings sense to the figures and comprises different categories including Profitability ratios, Liquidity ratios, Investment ratios and Efficiency ratios. Profitability ratio compares the effectiveness of a company with another company. Liquidity ratio compares the liquidity of one company with another company. Investment ratio is used while making investment decisions. Efficiency ratio compares the efficiency of a company with other company. Uses: accounting definition, Ratios are mainly found helpful in comparing the results of a company over a period of time and therefore compares one companys result with that of the ,other. It is the best way to compare companies of world class or with the, industry standard for that type of business. The company's results with those expected.It is useful to use budgets for this purpose.
Accrual: Accrual is defined as the amount unaccounted for, however still payable at the year end. Usually, it is evaluated and then is added to the operating cost deducted from the income in the Profit and Loss account. Similarly, it is necessary to add the same amount to Trade Creditors in the Current Liabilities section of the Balance sheet.
Asset: An asset is an item of rate, possessed by the business Balance Sheet: Balanced Sheet is defined as a financial report that illustrates the worth of a business. It is the simple definition that can be provided as the appraisal of a business is a very complex topic. Balance Sheet illustrates the business resources and liabilities simultaneously and is referred to as the "snap shot".
Bank Cash: It is the sum of money held the bank in the form of cash and is normally found in the Current Assets section of the Balance Sheet. When the amounts are in discrepancy, the bank account is considered as an overdraft and will not been shown in current possessions but is shown in the Current Liabilities section of the balance sheet.
Capital: Capital refers to the items such as hard cash or other resources generally invested into the business by the owners. It is, at times also referred to as Capital Introduced. From the company point of view capital is mentioned as share capital. Also the term Capital Employed is given to the sum of Share Capital, found usually in two varieties ordinary and preference, Loan capital, a grand name given to long term loans and Reserves. Current Asset Current Assets are nothing but assets that are likely to be expended and replaced within a short period of time, one year. It is also otherwise called as a short term asset.
An asset can be: Accumulation of finished goods or raw materials or in some measure finished good called as work in progress. Usually, it is found in trading account section of the profit and loss account and is otherwise called as closing stock. Importantly, you have to keep in mind that the closing stock comes out both in the Balance sheet and in the Profit and Loss accounting definition. In addition, the sum of money is often shown net of Doubtful debts that which the sum of doubtful debts has reduced from the total figure for debtors.Also, the inference for Doubtful debts is generally an approximation and is known as a stipulation for doubtful debts. Further, the sum represents amounts under dispute with customers or amounts which customers are having difficulty in paying because of cash flow problems.
Depreciation: Depreciation is defined as the measure of wearing out of a fixed asset. Usually, every fixed asset is estimated to wear out there by, become less efficient and to get "tired". Therefore, it is planned as the estimate of this measure of wearing out and is a charge in the Profit and loss Account. In the same way, Accumulated Depreciation is the sum of reduction charges to date removed from the cost of the fixed assets to show Net Book Value in the
Balance Sheet Drawing: It is the asset reserved from the business by the owners and is usually cash but can be any asset withdrawn. From company point of view the Drawing is referred to as salaries for which the recompense for work is done by the owner. Also is called as dividends for which there is a share of the profits. Fixed Assets: The term is used to denote the property used within the business and not obtained for the reasons of resale. Some examples for Fixed Assets include Land, buildings, Plant and machinery including knitting machines and cup making machinery, Fixtures and fittings including light fittings and shelving, Motor vehicles including vans and cars.
Accounting Ratio: It brings sense to the figures and comprises different categories including Profitability ratios, Liquidity ratios, Investment ratios and Efficiency ratios. Profitability ratio compares the effectiveness of a company with another company. Liquidity ratio compares the liquidity of one company with another company. Investment ratio is used while making investment decisions. Efficiency ratio compares the efficiency of a company with other company. Uses: accounting definition, Ratios are mainly found helpful in comparing the results of a company over a period of time and therefore compares one companys result with that of the ,other. It is the best way to compare companies of world class or with the, industry standard for that type of business. The company's results with those expected.It is useful to use budgets for this purpose.
Accrual: Accrual is defined as the amount unaccounted for, however still payable at the year end. Usually, it is evaluated and then is added to the operating cost deducted from the income in the Profit and Loss account. Similarly, it is necessary to add the same amount to Trade Creditors in the Current Liabilities section of the Balance sheet.
Asset: An asset is an item of rate, possessed by the business Balance Sheet: Balanced Sheet is defined as a financial report that illustrates the worth of a business. It is the simple definition that can be provided as the appraisal of a business is a very complex topic. Balance Sheet illustrates the business resources and liabilities simultaneously and is referred to as the "snap shot".
Bank Cash: It is the sum of money held the bank in the form of cash and is normally found in the Current Assets section of the Balance Sheet. When the amounts are in discrepancy, the bank account is considered as an overdraft and will not been shown in current possessions but is shown in the Current Liabilities section of the balance sheet.
Capital: Capital refers to the items such as hard cash or other resources generally invested into the business by the owners. It is, at times also referred to as Capital Introduced. From the company point of view capital is mentioned as share capital. Also the term Capital Employed is given to the sum of Share Capital, found usually in two varieties ordinary and preference, Loan capital, a grand name given to long term loans and Reserves. Current Asset Current Assets are nothing but assets that are likely to be expended and replaced within a short period of time, one year. It is also otherwise called as a short term asset.
An asset can be: Accumulation of finished goods or raw materials or in some measure finished good called as work in progress. Usually, it is found in trading account section of the profit and loss account and is otherwise called as closing stock. Importantly, you have to keep in mind that the closing stock comes out both in the Balance sheet and in the Profit and Loss accounting definition. In addition, the sum of money is often shown net of Doubtful debts that which the sum of doubtful debts has reduced from the total figure for debtors.Also, the inference for Doubtful debts is generally an approximation and is known as a stipulation for doubtful debts. Further, the sum represents amounts under dispute with customers or amounts which customers are having difficulty in paying because of cash flow problems.
Depreciation: Depreciation is defined as the measure of wearing out of a fixed asset. Usually, every fixed asset is estimated to wear out there by, become less efficient and to get "tired". Therefore, it is planned as the estimate of this measure of wearing out and is a charge in the Profit and loss Account. In the same way, Accumulated Depreciation is the sum of reduction charges to date removed from the cost of the fixed assets to show Net Book Value in the
Balance Sheet Drawing: It is the asset reserved from the business by the owners and is usually cash but can be any asset withdrawn. From company point of view the Drawing is referred to as salaries for which the recompense for work is done by the owner. Also is called as dividends for which there is a share of the profits. Fixed Assets: The term is used to denote the property used within the business and not obtained for the reasons of resale. Some examples for Fixed Assets include Land, buildings, Plant and machinery including knitting machines and cup making machinery, Fixtures and fittings including light fittings and shelving, Motor vehicles including vans and cars.
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