Account 1 Marks Question

Capital is the amount invested by the proprietor or the partner in the business.

Goods are the physical items of trade.

Non-current Liabilities and Current Liabilities.

Stock-in-Trade (Inventories) and Cash in Hand.

Credit transaction is a financial transaction or event that is not settled immediately, i.e., is agreed to be settled later.

Merchandise means goods for resale.

Creditors, Bills Payable and Outstanding Expenses.

Income is profit earned during the accounting period, i.e., revenue minus expenses.

Long-term loans and Debentures.

Dravings is the amount of money or value of goods which the proprietor or partner withdraws for personal use.
For example: Withdrawal of cash by the proprietor for personal use.

Cash transaction is a financial transaction or event that is settled immediately in cash.

Voucher is an evidence of a business transaction.

Income = Revenue - Expense
= ₹ 21,000 - ₹ 15,000 = ₹ 6,000.

Expenditure is the amount spent or liability incurred for acquiring assets, goods or services.

No, it will not be recorded in the books of account because it is not a transaction.

Debtors are persons and/ or other entities who owe to an enterprise an amount for buying goods and services on credit. The total amount standing against such persons and/ or entities on the closing date, is shown in the balance sheet as sundry debtors on the asset side.

1. Sales: Sales are total revenues from goods or services sold or provided to customers. Sales may be cash sales or credit sales.
2. Cost: It is the amount of expenditure incurred on or attributable to a specified article, product or activity.

Opening Stock (Inventory): Opening Stock is the stock-in-hand in the beginning of the accounting year. In other words, it is stock-in-hand at the end of the previous accounting year.
Closing Stock (Inventory): Closing Stock is the stock-in-hand at the end of the current accounting period.

Creditor is the person to whom an amount is owed on account of credit purchases of goods and/ or services in the normal course of business.

It is the amount withdrawn or goods taken by the proprietor or partner for personal use. Goods so taken by the proprietor or partner are valued at purchase cost. Drawings reduces the investment (or capital) of the owners. Drawings by the proprietor or partner is debited to Drawings Account. At the time of preparing Balance Sheet, it is deducted from the capital of the proprietor or partner, as the case is.

The term 'Purchase is used for purchase of goods for resale or for producing the finished products which are also to be sold. The term 'purchase includes both cash and credit purchases of goods. Goods purchased for cash are termed as Cash Purchases and goods purchased on credit are termed as Credit Purchases.

Debtor is a person who owes amount to the business on account of credit sales of goods and/ or services in the normal course of business.

Asset is a property (land, machine, goods, premises, etc.) or legal rights (patents, copyrights, etc.) owned by an individual or business which can be measured in money terms.

Tangible Assets are the assets which have physical existence, i.e., they can be seen and touched such as Land, Building, Plant and Machinery and Computers.

Liabilities mean amount owed (payable) by the business. Liability towards the owners (proprietor or partners) of the business is termed as internal liability. On the other hand, liability towards the outsiders, i.e., other than the owners proprietor or partners) is termed as external liability.

Assets are the properties (tangible assets and intangible assets) owned by an entity or enterprise. They are the economic resources of the business. In other words, anything which will enable the firm to get economic benefit in the future, is an asset.
Examples of assets are: Land, building, machinery, furniture, stock, debtors, cash and bank balances, trademarks, copyrights, goodwill, etc.

The difference between the Current Assets and Current Liabilities is known as Working Capital.

It is the amount withdrawn or goods taken by the proprietor or partner for personal use. Goods so taken by the proprietor or partner are valued at purchase cost. Drawings reduces the investment (or capital) of the owners. Drawings by the proprietor or partner is debited to Drawings Account. At the time of preparing Balance Sheet, it is deducted from the capital of the proprietor or partner, as the case is.

Expense: Expense is the cost incurred for generating revenue.
Loss: Loss is excess of expenses of a period over its revenues.

A profit that arises from events or transactions which are incidental to business such as sale of fixed assets, winning a court case, appreciation in the value of an asset.

Withdrawal of money and/ or goods by the owner from the business for personal use is known as drawings. Drawings reduces the investment of the owners.

Goods are the physical items of trade that are purchased to be sold. The term applies to all the items making up the sales or purchases of a business. Stating differently, they are the Stock-in-Trade of an enterprise, purchased or manufactured with the purpose of selling. For an enterprise dealing in home appliances such as TV, Fridge, AC, etc., are goods and for a Stationer, Stationery is goods.

Costs incurred by a business in the process of earning revenue are known as expenses. Generally, expenses are measured by the cost of assets consumed or services used during an accounting period.
The usual items of expenses are: Depreciation, rent, wages, salaries, interest, cost of heater, light and water, telephone, etc.

Withdrawal of money and/ or goods by the owner from the business for personal use is known as drawings. Drawings reduces the investment of the owners.

Debtors are persons and/ or other entities who owe to an enterprise an amount for buying goods and services on credit. The total amount standing against such persons and/ or entities on the closing date, is shown in the balance sheet as sundry debtors on the asset side.

The excess of revenues of a period over its related expenses during an accounting year is profit. Profit increases the investment of the owners.

Fixed Assets are the assets which are acquired not with a purpose to resell but with a purpose to increase the earning capacity of the business.

These are the amounts of the business earned by selling its products or providing services to customers, called sales revenue.
Other items of revenue common to many businesses are: commission, interest, dividends, royalities, rent received, etc. Revenue is also called income.

Intangible Assets are the assets which do not have a physical existence, i.e., they cannot be seen or touched such as Computer Software and Goodwill.

Revenue from Operations means revenue earned by the enterprise from its Operating Activities such as Net Sales (Sales- Sales Return), services rendered, sale of scrap, etc.

The documentary evidence in support of a transaction is known as voucher.
For example: If we buy goods for cash, we get cash memo, if we buy on credit, we get an invoice; when we make a payment we get a receipt and so on.

These are the amounts of the business earned by selling its products or providing services to customers, called sales revenue.
Other items of revenue common to many businesses are: commission, interest, dividends, royalities, rent received, etc. Revenue is also called income.