Cheque: A bill of exchange drawn on a specified banker and payable on demand.
Stale Cheque: A stale cheque means not valid of cheque that means more than six months the cheque is not valid.
Bank reconciliation statement:
It is a statement reconciling the balance as shown by the bank passbook and the balance as shown by the Cash Book. Obj: to know the difference & pass necessary correcting, adjusting entries in the books.
Matching concept: Matching means requires proper matching of expense with the revenue.
Capital income: The term capital income means an income which does not grow out of or pertain to the running of the business proper.
Revenue income: The income, which arises out of and in the course of the regular business transactions of a concern.
Capital expenditure: It means an expenditure which has been incurred for the purpose of obtaining a long term advantage for the business.
Revenue expenditure: An expenditure that incurred in the course of regular business transactions of a concern.
Differed revenue expenditure: An expenditure, which is incurred during an accounting period but is applicable further periods also. Eg: heavy advertisement.
Bad debts: Bad debts denote the amount lost from debtors to whom the goods were sold on credit.
Depreciation: Depreciation denotes gradually and permanent decrease in the value of asset due to wear and tear, technology changes, laps of time and accident.
Fictitious assets: These are assets not represented by tangible possession or property. Examples of preliminary expenses, discount on issue of shares, debit balance in the profit And loss account when shown on the assets side in the balance sheet.
Intangible Assets: Intangible assets mean the assets which is not having the physical appearance. And it’s have the real value, it shown on the assets side of the balance sheet.
Accrued Income: Accrued income means income which has been earned by the business during the accounting year but which has not yet been due and, therefore, has not been received.
Outstanding Income: Outstanding Income means income which has become due during the accounting year but which has not so far been received by the firm.
Suspense account: The suspense account is an account to which the difference in the trial balance has been put temporarily.
Depletion: It implies removal of an available but not replaceable source, Such as extracting coal from a
Amortization: The process of writing of intangible assets is term as amortization.
Dilapidations: The term dilapidations to damage done to a building or other property during tenancy.
Capital employed: The term capital employed means sum of total long term funds employed in the business. i.e. (Share capital+ reserves & surplus +long term loans – (non business assets + fictitious assets)
Equity shares: Those shares which are not having pref. rights are called equity shares.
Pref.shares: Those shares which are carrying the pref.rights are called pref. shares Pref.rights in respect of fixed dividend. Pref.right to repayment of capital in the event of company winding up.
Leverage: It is a force applied at a particular work to get the desired result.
Operating leverage: The operating leverage takes place when a changes in revenue greater changes in EBIT.
Financial leverage: It is nothing but a process of using debt capital to increase the rate of return on equity
Combine leverage: It is used to measure of the total risk of the firm = operating risk + financial risk.
Joint venture: A joint venture is an association of two or more the persons who combined for the execution of a specific transaction and divide the profit or loss their of an agreed ratio.
Partnership: Partnership is the relation b/w the persons who have agreed to share the profits of business carried on by all or any of them acting for all.
Factoring: It is an arrangement under which a firm (called borrower) receives advances against its receivables, from financial institutions (called factor)
Capital reserve: The reserve which transferred from the capital gains is called capital reserve.
General reserve: the reserve which is transferred from normal profits of the firm is called general reserve.
Free Cash: The cash not for any specific purpose free from any encumbrance like surplus cash.
Minority Interest: Minority interest refers to the equity of the minority shareholders in a subsidiary company.
Capital receipts: Capital receipts may be defined as “non-recurring receipts from the owner of the business or lender of the money crating a liability to either of them.
Revenue receipts: Revenue receipts may defined as “A recurring receipts against sale of goods in the normal course of business and which generally the result of the trading activities”.