Closing stock is unsold goods during particular accounting period. <\/span><\/p>\n

There are three types of closing stock; they are:<\/span><\/p>\n

Closing stock of raw materials <\/span><\/p>\n

Closing stock of work-in-progress<\/span><\/p>\n

Closing stock of finished goods <\/span><\/p>\n

Closing stock of this year becomes opening stock of nest year. <\/span><\/p>\n

It is forward to next year. <\/span><\/p>\n

Closing stock is shown in assets side of balance sheet. <\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Keep in Mind (KIM) <\/span><\/b><\/p>\n\n\n\n\n

\n Closing stock: given in trial balance is shown in assets side of balance sheet.<\/span><\/p>\n<\/td>\n<\/tr>\n

\n Closing stock: given in adjustment is credited in trading account; it is also shown in assets side of balance sheet.<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Administrative expenses (office expenses, operating expenses)<\/span><\/b><\/b><\/h3>\n All the costs related to management and administrative of the organization is known administrative expenses. <\/span><\/p>\n These expenses are incurred day-to-day office activities. <\/span><\/p>\n The main expenses are office salary, management expenses, office expenses, office rent etc. <\/span><\/p>\n It is debited in profit and loss account.<\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Selling and distribution expenses<\/span><\/b><\/b><\/h3>\n The expense which is incurred or paid to sales of goods or service providing is known selling expenses. <\/span><\/p>\n This expense also includes distribution expenses.<\/span>\u00a0<\/span><\/p>\n It is also known secondary packaging expenses. <\/span><\/p>\n The main selling and distribution expenses are godown (warehouse) rent, advertisement, expenses of delivery van etc. <\/span><\/p>\n This expense is debited in profit and loss account.<\/span><\/p>\n \u00a0<\/span><\/p>\n Depreciation<\/span><\/b><\/b><\/h3>\n All the business organizations purchase fixed assets like building, plant and machinery, furniture, vehicle, equipment etc. <\/span><\/p>\n These assets are not purchased for resale. <\/span><\/p>\n These assets help to run-on the business smoothly. <\/span><\/p>\n These assets also help to generate profit. <\/span><\/p>\n After using these assets, their life, working capacity and value will be decreased. <\/span><\/p>\n This decrease value is called depreciation. <\/span><\/p>\n Depreciation is non-cash expenses. <\/span><\/p>\n It is debited in profit and loss account. <\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Written off or amortization<\/span><\/b><\/h3>\n Most of the business organization should pay some expenses to establish the firm. The aye:<\/span><\/p>\n Preliminary expenses<\/span><\/p>\n Discount on issue of share or debentures (for limited company)<\/span><\/p>\n Loss on issue of debentures (for limited company)<\/span><\/p>\n Huge investment on advertisement etc<\/span><\/p>\n Above amount are fictitious or intangible assets. These assets are written off during specific period. <\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Keep in Mind (KIM) <\/span><\/b><\/p>\n\n\n\n\n\n \n Depreciation is not charged on land.<\/span><\/p>\n<\/td>\n<\/tr>\n \n Depreciation is charged on fixed or tangible assets (building, plant and machinery, furniture, vehicle, equipment)<\/span><\/p>\n<\/td>\n<\/tr>\n \n Written off or amortized on fictitious or intangible assets (preliminary expenses,\u00a0 discount on share\/debentures)<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Financial expenses<\/span><\/b><\/b><\/h3>\n Financial expenses are the interest expenses. <\/span><\/p>\n Interest is paid on debts or loan. <\/span><\/p>\n There are two types of loan; they are short-term loan and long-term loan. <\/span><\/p>\n Short-term loan is taken for one year but long-term loan for more than one years.<\/span><\/p>\n \u00a0<\/span><\/p>\n Loan<\/span><\/b><\/b><\/h3>\n There are two types of loan; they are short-term loan and long-term loan. <\/span><\/p>\n Short-term loan is taken for one year but long-term loan is taken for more than one year. <\/span><\/p>\n Loans are categorised: <\/span><\/p>\n Short-term loan (for maximum one year)<\/span><\/p>\n Medium-term loan (for more than one year to three years)<\/span><\/p>\n Long-term loan (for more than three years to fifteen years)<\/span><\/p>\n Very long-term loan (upto thirty years)<\/span><\/p>\n \u00a0<\/span><\/p>\n Keep in Mind (KIM) <\/span><\/b><\/p>\n\n\n\n\n \n Some loans are bank loan, mortgage loan, bond, debentures etc.<\/span><\/p>\n<\/td>\n<\/tr>\n \n These loans are further subdivided as secured loans and unsecured loans. <\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Miscellaneous expenses<\/span><\/b> <\/b><\/h3>\n All other expenses which do not part of any heading are included in miscellaneous expenses. <\/span><\/p>\n They are loss on sale of fixed assets, loss by fire, theft or embezzlement, sundry expenses etc. <\/span><\/p>\n When there are small expenses, they are also included in this heading. <\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Incomes and expenses<\/span><\/b><\/b><\/h3>\n There are some transactions that are expenses as well as income. <\/span><\/p>\n\n\n\n\n\n\n\n\n \n Transactions <\/span><\/p>\n<\/td>\n \n Expenses (debit)<\/span><\/p>\n<\/td>\n \n Income (credit) <\/span><\/p>\n<\/td>\n<\/tr>\n \n Discount <\/span><\/p>\n<\/td>\n \n Discount allowed <\/span><\/p>\n<\/td>\n \n Discount received <\/span><\/p>\n<\/td>\n<\/tr>\n \n Commission <\/span><\/p>\n<\/td>\n \n Commission paid <\/span><\/p>\n<\/td>\n \n Commission received <\/span><\/p>\n<\/td>\n<\/tr>\n \n Rent <\/span><\/p>\n<\/td>\n \n Rent paid\u00a0\u00a0 <\/span><\/p>\n<\/td>\n \n Rent received <\/span><\/p>\n<\/td>\n<\/tr>\n \n Interest <\/span><\/p>\n<\/td>\n \n Interest paid<\/span><\/p>\n<\/td>\n \n Interest received <\/span><\/p>\n<\/td>\n<\/tr>\n \n Dividend <\/span><\/p>\n<\/td>\n \n Dividend paid<\/span><\/p>\n<\/td>\n \n Dividend received<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Assets<\/span><\/b><\/b><\/h3>\n Assets are the economic resources reported in the balance sheet. <\/span><\/p>\n Assets represent probable future economic benefits. <\/span><\/p>\n The values of tangible assets are also known fixed assets. <\/span><\/p>\n They have their physical substance. <\/span><\/p>\n Intangible assets do not have physical substance. <\/span><\/p>\n\n\n\n\n\n \n Fixed assets:<\/span><\/b><\/p>\n<\/td>\n \n land and building, plant and machinery, furniture and fitting, vehicle etc.<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current assets:<\/span><\/b><\/p>\n<\/td>\n \n cash in hand, cash at bank, stock or inventory, debtors, bills receivable, account receivable, prepaid expenses etc.<\/span><\/p>\n<\/td>\n<\/tr>\n \n Fictitious assets:<\/span><\/b><\/p>\n<\/td>\n \n goodwill, trade mark, preliminary expenses etc.<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Cash and cash equivalents<\/span><\/b> <\/b><\/h3>\n Any assets than can be converted into cash within 90 days, that is known as cash and cash equivalent. <\/span><\/p>\n This includes currency of current and savings accounts, cash in transit. <\/span><\/p>\n Commercial papers that is convertible within 90 days. <\/span><\/p>\n These papers are very short-term securities.<\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Account receivables or debtors<\/span><\/b><\/h3>\n When goods are sold on credit, there are two options. <\/span><\/p>\n They are debtors and bills receivable. <\/span><\/p>\n When goods are sold on credit without guarantee, it is known debtors. <\/span><\/p>\n But when goods are sold on credit with promissory note or tamasuk<\/i>, it is known bills receivable. <\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Keep in Mind (KIM) <\/span><\/b><\/p>\n\n\n\n\n\n \n Other name of bills receivable are account receivable and notes receivable.<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bills receivable is British words while account receivable is American words.<\/span><\/p>\n<\/td>\n<\/tr>\n \n Notes receivable is similar to account receivable in accountancy but different in finance.<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Stock or inventory<\/span><\/b>\u00a0\u00a0 <\/span><\/b><\/b><\/h3>\n Stock is most important current assets for manufacturing company. <\/span><\/p>\n It includes raw materials, work in progress, finished goods and goods in transit etc.<\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Prepaid expenses <\/span><\/b><\/b><\/h3>\n Prepaid expenses are payments made in advance resulting into a right to receive compensation or a claim to use assets of another entity like prepaid insurance and prepaid rent. <\/span><\/p>\n These expenses are shown in current assets (loan and advance). <\/span><\/p>\n \u00a0<\/span><\/p>\n Investment<\/span><\/b><\/b><\/h3>\n Excess money or profits are invested into other company. <\/span><\/p>\n Generally, these investments are made for two reasons. <\/span><\/p>\n First is to earn income and second to control-over another company. <\/span><\/p>\n Another class of investments is purchase of fixed assets for making.<\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Current liabilities<\/span><\/b><\/h3>\n Current liabilities are obligations that are to be cleared within one year or operating cycle. <\/span><\/p>\n The current liabilities are creditors, accounts payable, outstanding expenses, pre-received incomes, tax payable, unclaimed dividends, provident fund etc. <\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Provisions<\/span><\/b><\/b><\/h3>\n Provision means possible or expected need. <\/span><\/p>\n For provision, amounts are set-aside for any losses or liabilities for future periods. <\/span><\/p>\n The provisions could be for tax, staff benefit, gratuity, pension, medical and insurance, and other provisions. However, provisions for bad debts are not shown here. It is deducted from debtors or accounts receivable.<\/span><\/p>\n  <\/p>\n Equity<\/span><\/b> or capital <\/span><\/b><\/b><\/p>\n Equity is referred to limited company. Equity is also known owner\u2019s equity. <\/span><\/p>\n It is the claims against the resources of an entity. <\/span><\/p>\n Equity is the same as net assets (net assets = assets \u2013 liabilities). <\/span><\/p>\n Capital represents the amount contributed by the owners, partners, or shareholders depending upon the form of ownership.<\/span><\/p>\n \u00a0<\/span><\/p>\n Reserve, funds, retained earnings or surplus<\/span><\/b><\/h3>\n Reserve and fund are created from profit. <\/span><\/p>\n Retained earnings are cumulative profit. Surplus is current year\u2019s profit. <\/span><\/p>\n These are the claim of shareholders. <\/span><\/p>\n They are share premium, debenture premium, revaluation profit on long-term assets, profit on redemption of debentures, share forfeiture, profit prior incorporation, capital reserves. <\/span><\/p>\n General reserve, capital reserves, revenue reserve, dividend equalization fund, sinking funds for redemption or repayment of loans. <\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n Drawings or withdrawals <\/span><\/b><\/h3>\n Amount or money’s worth goods withdrawn by the proprietor for his personal, private or domestic use is known drawings. <\/span><\/p>\n The uses of business assets for domestic purposes are also considered as drawings. <\/span><\/p>\n For accounting purposes, drawings and withdrawals are different. <\/span><\/p>\n Drawings are made out of business profits and withdrawals are made out of proprietor’s capital contribution. <\/span><\/p>\n \u00a0<\/span><\/p>\n ***** #EP<\/span>Online<\/span>Study *****<\/span><\/p>\n Thank you for investing your time.<\/span><\/i><\/p>\n Please comment on article.<\/span><\/i><\/p>\n You can help me by sharing this article at your social media platform.<\/span><\/i><\/p>\n \u00a0<\/span><\/p>\n Jay G<\/span>o<\/span>o<\/span>g<\/span>l<\/span>e<\/span>, Jay YouTube<\/span>, Jay Social Media<\/span><\/span><\/p>\n \u091c\u092f \u0917\u0942<\/span>\u0917<\/span>\u0932<\/span>, <\/span>\u091c\u092f \u092f\u0941\u091f\u094d\u092f\u0941\u092c<\/span>, <\/span>\u091c\u092f \u0938\u094b\u0936\u0932 \u092e\u093f\u0921\u093f\u092f\u093e<\/span><\/span><\/p>\n \u00a0<\/span><\/p>\n  <\/p>\n","protected":false},"excerpt":{"rendered":" \u00a0 What are the basic accounting terminologies? There are different accounting terminologies. They are used in while studying\u00a0 subject matter and solving the problems. Some students join commerce at class 9, some at class 11 and some at graduation level. They listen these accounting words first time in their life. These accounting words and phrases […]<\/p>\n","protected":false},"author":19997,"featured_media":3033,"comment_status":"open","ping_status":"open","sticky":false,"template":"single-news.php","format":"standard","meta":{"footnotes":""},"categories":[164,1],"tags":[1194,1192,1220,1216,1217,1061,1206,1207,1208,1205,1204,1210,746,1185,1202,751,377,1109,1196,1183,1191,1209,1180,1218,1201,1189,1188,1073,858,1219,1190,1195,1215,388,1200,1186,1184,1214,376,1179,1181,1211,1213,1212,1197,1198,1193,1187,1182,1203,1199,1178,752],"writers":[144],"yoast_head":"\n