Professional Documents
Culture Documents
Business
Any activity which is under taken to earned Profit / Income.
Business Purpose
To achieve solvency.
Liquidity
The ability to pay short term Debts / Liabilities / (Obligation), when they come due.
Solvency
To have this ability (liquidity) all the time. 2/10, n/30
Operating Cycle.
Cash Merchandise Inventory (Stock) Credit Sales A/c Rec cash
Inventory
The things /goods in which we deal. The things/goods which we purchase for reselling purpose. 1
Types of Business
1. 2. 3. Service Trading (Buying & selling) / Merchandising Manufacturing Concern
Accounting Equation
Assets = Liabilities + Owners Equity /Capital / Stock Holders Equity Balance Sheet / Financial Portion Company Ordinance 1984 should follow all the Organization.
Definition of Asset
Anything through which we can run /Operate our business.
5th Principle
Objectivity Principle
Types of Assets
1. 2. Current Assets Fixed / Non Current Assets.
1.
Current Assets
Asset which will be converted into cash within 1 year, or operating cycle whichever is longer OR Assets which will be consumed with 1 year, or operating cycle whichever is longer. Supplies / Stationery Prepaid / Pre Payments Merchandise Inventory
Sale
Cash
2.
1. 2.
Sources of Finance / Capital Providers It does not Mature Residual Claim Internal Claim on Business
Revenue
Revenue is the source of income Selling price of goods & services
Expenses
Cost incurred to generate the revenue.