Accounting

Beginner to Advance
 Terms
• Expenses
An expense is the cost of operations that a company incurs to
generate revenue.

Eg: salary, Rent paid

 Terms
• Income
Income is money that an individual or business receives, usually in
exchange for providing a good or service or through investing capital.

Eg: commission received, discount received

 Terms
• Assets
An asset is anything of value or a resource of value that can be
converted into cash.
Two types
1.Fixed assets: A fixed asset is a long-term tangible piece of property or
equipment that a firm owns and uses in its operations to generate income
2.Current assets: Current assets are a balance sheet item that represents the
value of all assets that could reasonably be expected to be converted into cash
within one year.
 Terms
• Liabilities
A liability is something a person or company owes, usually a sum of
money.
Two types
1.Long term liabilities : long-term liabilities are financial obligations of a
company that are due more than one year in the future.
2.Short term liabilities : A short-term liability is a financial obligation that is to be
paid within one year.
Terms
• Capital

It is the investment made by the owners for use in the business. It is

also called owner’s equity
Terms
• .Drawings

It represents the amount of cash or other assets withdrawn by the

owner for his personal use.