Business Accounting Terminology Words | Definition Of Business | Means Of Trade | Definition Of Profession | Business Transactions | Means Of Proprietor | Definition Of Capital | Means Of Drawing / Withdrawal | Definition Of Goods | Means Of Debtor | Definition Of Creditor | Means Of Purchase | Definition Of Purchase Return | Means Of Sales | Definition Of Sales Return | Means Of Bad Debt | Definition Of Bad Debt Recover | Means Of Assets | Definition Of Liabilities | Means Of Financial Year | Definition Of Stock | Means Of Discount | Definition Of Bankrupt | Means Of Depreciation | Definition Of Tax | Means Of Loan | Definition Of Interest | Means Of Bank Overdrafts | Definition Of Investment / Appropriation | Means Of Provision
To run any business properly, recording all the transactions taking place in the business in the books is called Accounting. But in business, specific words are used to maintain accounts. It is also called business language. And the book in which this accounting is done is called journal. These words are of the following types.
Definition Of Business
Business means any legal work whose objective is to earn profit or income. That is, all those human activities by which goods or services are regularly produced, sold and exchanged in exchange for money. Money is earned. Is called business. Business is a very broad term. In which economic activities like production of goods and services, mining, purchasing, selling, transportation, storage, banking, insurance and manufacturing etc. are done. Whose results can be measured in currency.
Means Of Trade
Trade means transfer of ownership of goods and services to a person or organization. Buying or selling goods and services regularly to earn profits is called business. The place where such activities take place is called market, it is of two types. Like:- mobile making, farming etc.
Types Of Trade
- Domestic trade - A trade where goods and services are bought or sold within the borders of a country. This is called domestic trade or internal trade.
- Foreign trade - A trade where goods and services are bought or sold outside the borders of a country. That is, goods and services are exchanged between two countries. This is called foreign trade or international trade. What is called profession?
Definition Of Profession
A work that requires specific knowledge, skill and training to earn income. Which is used for the interests of the society. And the income received in return for that service is called profession. Such as advice or training given by teachers, doctors, CA etc.
Business Transactions
Any transaction whose value is measured in currency terms. That is, the transaction of goods and services between two persons or institutions is called business transaction or deal.
Transactions in business are done in two ways. cash and credit
- Cash Transaction – When any transaction is paid at the same time through cash or bank. So it is called cash deal.
- Credit Transaction – When a transaction is not paid immediately but after some time. It is called loan or credit.
Means Of Proprietor
A person or organization that gathers the necessary resources to start a business. And has the right to receive benefits and bears the risk of loss. Like:- Capital, Machine, Land, Computer etc.
Definition Of Capital
Capital means money and property. Which is called the capital invested by the business owner to start the business. Just as blood circulation is necessary in humans. Similarly, capital is required in business. Such as:- Cash, Furniture, Building, Land and Machine etc.
Means Of Drawing / Withdrawal
Withdrawal means the opposite of capital. Just like the money a business owner invests in the business. That is called capital. But when the owner removes any item from the business for his personal use. Is called Drawing / withdrawal.
Definition Of Goods
All those physical goods or products that are bought and sold by any person or organization. Are called goods. Wheat lying with the farmer, wood lying with the farmer, cars kept in the car showroom etc.
Means Of Debtor
A person or organization that sells goods for its own business. But pays it later. i.e. one carrying goods on credit
Definition Of Creditor
A person or organization from where we get goods on credit for our business. But it has to be paid later.
Means Of Purchase
Goods or materials that are to be sold or purchased for manufacturing. Which will be sold later is called purchase.
Definition Of Purchase Return
Items or materials that we have purchased. But if it is returned back to the merchant due to some reason, it is called return. It is also called Outward Return.
Means Of Sales
Goods or materials that have been purchased or prepared and sold. Is called sales.
Definition Of Sales Return
Such items or materials which we have sold but which have been returned by the merchant for some reason. Is called sales return. This is also called Inward Return.
Means Of Bad Debt
The amount of money received by selling goods on credit to any person or institution. But it is known that payment may not be received from him. Is called bad debt.
Definition Of Bad Debt Recover
An amount which was considered lost by us. But now it is available. Is called Bad Dept Recover
Means Of Assets
Things that help us run our business. Are called assets. These are of two types
- Fixed Assets :- Assets that help us run our business in the long run. Like:- Building, Machine, Furniture, Fame etc.
- Current Assets :- Assets that help us run our business in the short term. That is, which changes according to time like:- back balance, stock, debtors, cash etc.
Definition Of Liabilities
Borrowed money or goods taken from another person or institution which has to be repaid when the time comes is called liability. This is also of two types.
- Long term liability :- There are some liabilities which have to be paid after a long time i.e. usually after one year. Such as long-term loans, capital, debentures etc.
- Short term liability :- Obligations that have to be paid within a year. Such as creditors, bills payable, bank loans, bank overdrafts or other short-term loans.
Means Of Financial Year
One year at a time in which how much you have earned. And how much has been spent has to be managed. Is called the second year. In India, the financial year is considered from 1st April to 31st March.
Definition Of Stock
Goods held on the last day of a financial year which have not been sold. That is, the remaining goods are called Stock.
- Opening stock - The goods remaining on the first day of the financial year are called Opening stock.
- Closing Stock - The goods remaining on the last day of the financial year are called Closing Stock .
Means Of Discount
The reduction made by the trader in the prices of the goods while selling and buying his goods is called discount or discount.
- Trade discount – The discount given at the time of buying and selling goods is called trade discount. of which no account is kept
- Cash Discount - The discount given for quick receipt of payment received and given after buying and selling of goods is called cash discount.
Definition Of Bankrupt
A person or organization which has taken a loan and is unable to repay it is called bankrupt. The liabilities of such a person exceed the value of his assets. As a result, he partially repays his debts and is declared bankrupt by the court.
Means Of Depreciation
The decline or decrease in the value of assets or objects due to use or passage of time is called depreciation.
Formula = Value of the asset) / Estimated life of the asset
Definition Of Tax
The amount of money taken by the government from any person or organization to raise revenue for social works is called tax.
- Direct tax :- A tax taken by the government directly according to the income of a person or organization. Like Income Tax, Gift tax, Wealth Tax, TDS, TCS etc.
- Indirect tax :- A tax taken by the government which is not taken directly from any person or organization. Whereas it is levied on the goods and services purchased by them. Like - GST, Sales Tax, VAT, Stamp Duty etc.
Means Of Loan
A loan taken from an individual or a bank to meet the needs of business is called loan. These are of two types-
- Secured Loan – A loan taken by mortgaging a property is called secured loan. In case the individual or the bank does not get the loan back, it is compensated from the mortgaged property.
- Unsecured Loan: A loan taken without mortgaging any property or in one's own business is called unsecured loan. The individual or the bank cannot be compensated in case the loan is not repaid.Therefore it is called unsecured loan.
Definition Of Interest
A sum of money loaned to a person or organization for which a fee is paid for its use. Is called interest.
Means Of Bank Overdrafts
When we withdraw more money than the amount deposited in the bank account. Which is determined by the bank. This is called bank overdraft
Definition Of Investment / Appropriation
Things purchased with the aim of getting profit in future are called property investment.
Means Of Provision
Some amount of money is accumulated in business. Which is kept for future expenses or losses.
