BOOKKEEPING

Bookkeeping is the process of recording data, related to the transactions, in the

accounting books.

ACCOUNTING
Accounting is about using the information from the accounting books and presenting it
in a way that it is helpful in decision making.
Like, how much to buy for stocks or furniture etc. or how to control costs and
maximise profits.
Accounting has many objectives, including letting people and organisations know:
o if they are making a profit or a loss;
o what their business is worth;
o what a transaction was worth to them;
o how much cash they have;
o how wealthy they are;
o how much they are owed;
o how much they owe to someone else;
o enough information so that they can keep a financial check on the things they
do.
However, the primary objective of accounting is to provide information for decision
making.
The information is usually financial, but can also be given in volumes, for example the
number of cars sold in a month by a car dealership or the number of cows in a
farmer’s herd.
CAPITAL
The total of resources supplied by the owner is termed as Capital.
Capital is often called the owner’s equity or net worth.
It comprises the
 funds invested in the business by the owner
 plus any profits retained for use in the business
 less any share of profits paid out of the business to the owner.

ASSETS
Assets are total of resources that are owned by the business.
Assets are categorised into two groups.
FIXED ASSETS or NON-CURRENT ASSETS CURRENT ASSETS
Assets that have a long life and have been Current assets consist of Cash,
bought with the intention to use them in goods for resale, amount receivable
the business and not with the intention of from people or items that have a
reselling them. short life.

LIABILITIES
Total of funds owed for assets supplied to a business or expenses incurred not yet
paid.
Liabilities are categorised into two groups.
NON-CURRENT LIABILITIES CURRENT LIABILITIES
Liabilities that are NOT to be paid for within Liabilities to be paid for within one
one year of the balance sheet date. year of the balance sheet date.

REVENUES
The financial value of goods and services sold to customers.

EXPENSES
The value of all the assets that have been used up to obtain revenues.
PURCHASES
Purchases are the goods or merchandise which have been purchased from suppliers
with the intention of selling them on profit.

PURCHASES RETURNS / RETURNS-INWARDS

Goods or merchandise that are returned to suppliers.

SALES
Sales are the goods or merchandise that have been sold to customers on a profit.

SALES RETURNS / RETURNS-OUTWARDS

Goods or merchandise that are returned to the business by the customers.

OPENING STOCK/INVENTORY
Goods or merchandise that remained unsold at the end of the previous accounting
period and are available for sale at the start of the current accounting period.

CLOSING STOCK/INVENTORY
Goods or merchandise that remained unsold at the end of the current accounting
period and will be available for sale at the start of the coming accounting period.

CARRIAGE-IN
Transportation charges paid to bring in the goods purchased from suppliers.

CARRIAGE-OUT
Transportation charges paid for the delivery, to the customers, for the goods sold.

CREDITORS / TRADE PAYABLES

Trade payables are the suppliers from whom goods have been purchased on credit.

DEBTORS / TRADE RECEIVABLES

Trade receivables are the customers to whom goods have been sold on credit.