Book keeping- act of recording business transaction in the book of original entry, in a systematic manner Double entry system

under this system each transaction is having two fold aspect (a) debit (b)credit Accounting- art of recording classifying summarizing monetary transactions (events of financial character)in a systematic manner Basis of accounting- 3 basis (a) cash basis- under this method revenue & cost ,assets & liabilities are reflected in accounts in the period in which actual receipts and payments are made. (b) Accrual basis/mercantile basis- under this revenue & cost ,assets & liabilities are reflected in accounts in the period in which in which they are occur. (c) Hybrid /mixed basis- under this method incomes are recorded on cash basis & expenses are recorded on accrual basis Assets: resources of value owned by a business entity. E.g machinery plant Fixed Asset - long-term tangible property; building, land, computers, etc. Liquid Asset - cash or other property that can be easily converted to cash Equity- it refers to the total claim against the enterprises (a) owners claim- capital, (b) outsiders claimliability Accounting equation: an expression of the equivalence, in total, of assets = liabilities + equity. Account: a record in a double entry system that is kept for each (or each class) of asset, liability, revenue and expense. Accounting period: that time period, typically one year, to which financial statements are related. Bad debts: debts known to be irrecoverable and therefore treated as losses by inclusion in the Profit and Loss (P&L) Account as an expense. Balance Sheet: a financial statement showing the financial position of a business entity in terms of assets, liabilities and capital at a specified date. i.e 31st march Creditors: those persons, firms or organizations to whom the enterprise owes money. Current assets: cash + those assets (stock, debtors, prepayments, bank accounts) which the management intend to convert into cash in the normal course of business within one year . Current ratio: the ratio of current assets to current liabilities. Debtors: those who owe money.

Depreciation: a measure of the wearing out, consumption or other loss of value whether arising from use, passage of time or obsolescence . Dividend: a distribution of earnings to its shareholders by a company. Drawings: cash or goods withdrawn from the business by a proprietor for his private use. Earnings per share: It calculated as after tax profits / number of shares. Goodwill: an intangible asset which appears on the Balance Sheet of some businesses. It is valued at (or below) the difference between the price paid for a whole business and the fair value of the net assets acquired. Revenue- it is the monetary value of the products & services sold to the customers during the period. It generates from sales,services. Bank Reconciliation- The process of accounting for the differences between the balance appearing

on the bank statement and the balance of cash according to the depositor's records.
Prepaid Expenses-The expenses paid in advance that do not expire during the current accounting

period; an asset account. Amortization - Gradual and periodic reduction of any amount, such as the periodic writedown of a BOND premium, the cost of an intangible ASSET or periodic payment Of MORTGAGES or other DEBT. Accrued Expenses- expenses that has occurred but is not recognized in the accounts. Accounting concepts 1-business entity- under this business and its owner treated as separate and distinct entity. It means business is treated as a individual entity. 2-money measurement concept- accounting records only those transaction which can be expressed in terms of money. 3-going concern concept- according to this business will run for an indefinite period of time. 4-cost concept- according to this concept asset is recorded in the book at the price paid to acquire it, market value of asset is not taken into consideration 5-dual concept- according to this every transaction is having two fold aspect ,dr & cr 6- accounting period concept- as per going concern business will run for an indefinite period of time, life of the business is divided into account periods in order to find out the financial position of the com

Provision- any amount that is retained by the way of providing depreciation, renewals in the value of asset or ratined by way of providing for any known liability It means we are keeping provision for a known liability, eg. Provision for debt provision for tax etc Contingent asset/ liability- these are those whose value is dependent upon the occurance or non occurance of a specified act.