Basic Accounting Principles

(Any three)
 Introduction
• It is important to learn about Accounting Terminologies before starting
with the study of Accounting.

• The knowledge about common terminologies of accounting helps us to

easily understand accounting n detail.

• We’ll be covering the following three terms of accounting in this

presentation:

vIncome
vProfit
vLoss
 Income
• Income is the profit earned during an accounting
period, the difference between revenue and
expense is termed as accounting.

• It includes profit from activities other than its

Operating Activities.

• For ex. Goods costing ₹ 15,000 are sold for ₹ 21,000,

the cost of goods sold, i.e. ₹ 15,000 is expense, the
sale of goods i.e. ₹ 21,000 is revenue and the
difference i.e. ₹ 6,000 is income. It can therefore be
expressed as:

Income = Revenue — Expense

Thank You
Presentation by: Japleen Kaur

Class: XI-CB
 Profit
• It refers to income earned by the business from its
Operating Activities i.e. the activities carried out by the
enterprise to earn profit. For example, profit earned
from sale of goods and/or rendering of services.

Profit is further divided into Gross Profit and Net

Profit:
• Gross Profit : gross profit is the difference between
revenue from sales and/or services rendered and its
direct cost.
• Net Profit : net profit is the profit after deducting total
expenses from total revenue of the enterprise. In case
total expenses are more than the total revenue, It is net
loss.
 Loss
• Loss is excess of expenses of a period over its
revenues. It decreases the owner’s equity.

• It includes loss incurred in its operating

(business) activities, money or money’s worth
lost against which the firm receives no benefit.
Eg., cash or goods lost in theft and loss arising
from events of non-recurring nature, eg., loss
on sale of fixed assets.