Notes

1. Bad Debts - Debts that cannot be recovered.
2. Bill Payable - Bills yet to be paid (liabilities).
3. Bills Receivable - Bills yet to be recovered or received. (Assets)
4. Trade Payable -Creditors + Bills Payable
5. Trade Receivable - Debtors + Bills Receivable.
6. Solvent - Firm/individual who can pay his debts.
7. Insolvent - Firm/individual who is not able to pay his debts.
8. Goods - Physical item which is used in trading.
9. Stock - Bulk of goods that are usually stored in warehouses.
10. Debtors - Who sell goods on credit. (Asset)
11. Creditors - Who buys goods on credit. (Liabilities)
12. Purchase Return/ Return Outwards - Returning the purchased goods to the seller because of some defect, etc.
13. Sales Return/Return Inwards - Goods that are returned by the purchaser.
14. Purchase - Procurement of goods and services for resale/production of finished goods
15. Sale - Selling goods and services.
16. Business Transactions - Transactions that include the exchange of goods and services.
types- Cash, credit, internal and external.
17. Entity- Economic unit which engages itself in business activities.
18. Proprietor - Owner of the business, who invests capital.
19. Capital - Money invested in the business.
20. Drawings - The owner withdraws money or goods for personal use.
21. Shareholders - People who invest in companies.
22. Assets - Tangible or intangible items that are owned by the business.
Types-
22.1 Current Assets - Which are not for sale. Intend to use it for the long term.
22.2 Non-Current Assets - Which are for sale. Intention to sell. Assets that can be converted into cash within a year.
23. Book Value - The value at which the item appears in the books of accounts.
24. Voucher - Evidence of business transaction.
25. Rebate - Discount on poor quality products.
26. Discount - Reduction in the price of a product.
26.1 Trade Discount - Not entered in the books of accounts. Discount received on purchase of bulk goods.
26.2 Cash Discount - entered in the books of accounts. Discount received at the time of payment
27. Expenditure - Amount spent to acquire goods and services.
27.1 Capital Expenditure - Amount spent to acquire assets. Gives benefits for more than a year.
27.2 Revenue Expenditure -Amount spent to acquire goods or services. Give benefits for less than a year. eg: wages, salary, etc.
27.3 Deferred Revenue Expenditure - It is also a revenue expenditure but the benefit is received for more than an accounting period.
28. Profit - excess of revenue over expense.
29. Loss- Excess of the expense of revenue.
30. Expense - Cost incurred on generating revenue.
30.1. Prepaid Expense - Paid before getting benefit.
Eg: Prepaid phone bill .
30.2 Outstanding expense - Paid after getting benefit.
Eg: Wages, salary etc.