be received or paid later. Account It is the basic unit for measurement in accounting. It is used for identifying a person, or an item in accounting. An account is opened individually for a person, asset, expense, income, etc.
In ledger, an account is a summary of transactions under a head. Capital It is the amount invested by the owner or proprietor in an organisation. Drawings It is the amount of cash or value of goods, assets, etc., withdrawn from the business by the owner for the personal use of the owner. Voucher Any written or printed document in support of a business transaction is called a voucher.
Examples: cash receipt, invoice, cash memo, bank pay- in- slip, etc. Invoice It is a statement prepared by a seller of goods to be sent to the buyer. It shows details of quantity, price, value, etc. of the goods and any discount given, finally showing the net amount payable by the buyer.
Goods It includes articles, things or commodities in which a business is dealing with. Example: Furniture will be goods for those who deal in furniture. Purchases Buying of goods with the intention of resale is called purchases. Purchases returns or returns outward When goods bought are returned to the suppliers, it is known as purchases returns or returns outward.
Sales When goods meant for resale are sold, it is called sales. Sales returns or returns inward When goods sold are returned by the customers, it is called as sales returns or returns inward. Stock Unsold goods lying in a business on a particular date are known as stock. Income It is the amount receivable or realised from sale of goods and earnings from interest, dividend, commission, etc.
Expense It is the amount incurred in order to produce and sell the goods and services. Solvency Solvency is the capability of a person or an enterprise to pay the debts. Insolvency Insolvency is the incapability of a person or an enterprise to pay the debts. Asset Any physical thing or right owned that has a monetary value is called asset.