5 Basic Accounting Terms

Asset

Assets are economic resources which are owned by a business. Or in other words Assets are things of value owned by a business. Asset may have definite physical character for example, building machinery etc. or may not have physical character for example, amount due from creditors, patent right etc. Asset can be classified in to two. The first one is called tangible asset and the other is intangible asset.

Liabilities

Liabilities are debts. It is the amount which a business owes and has to be repaid. The liabilities are arising from purchase of goods or services on credit basis are called an Account payable, and the person to whom it is to be paid is called creditor.

Capital

Capital refers to the amount invested by the owner of the business. it is also called Owner’s equity
Capital= Total Asset – Total Liabilities.
Capital is Liability to the business. They owes money to the owner .Business has a separate entity apart from its owner. As per accounting concept business and its ownership is separate.

Debtors

Debtor is a person who owes money to the business. Debtor is the customer to whom the goods & services are sold on credit. A group of debtors is called Sundry Debtors.

Creditors

Creditor is a person to whom business owes money or creditor is any person who gives credit to the business. A group of creditors is called Sundry Creditors.


Why your business needs bookkeeping

if you are interested in taking out a loan or some other form of bank financing, your bank will require financial data from you that will prove to them your business is in good economic standing. Banks want to see copies of your statements, cash flow budgets, and any other such financial data.

REASONS TO FILE ITR

Tax payers generally take filing of income tax return as a burden or an additional nod put on by the government. In fact, Income Tax Return is just a Statement of Income earned from various sources of income under 5 Heads such as Salary, House Property, Capital Gains, Business Profession, and Other Sources.