Basic Accounting Terms

Introduction

• Lecturer: Mr. Falana
• Topic: Basic Accounting Terms (Chapter 2 of Financial Accounting)
• Objective: To understand fundamental terms in accounting.
• Platform: Free education from 4th to 12th grade.
• Importance: Essential for clear fundamentals, practical life usage.

Key Topics Covered

Business Concept

• Business Idea Example: Selling flavored Rasgullas (chocolate, strawberry, mango) instead of traditional ones to stand out.
• Initial Investment: 1 lakh cash + 50,000 in goods (Rasgullas).
• Total Capital: 1.5 lakh rupees.

Key Accounting Terms

Capital (पूंजी/लागत)

• Definition: Money invested by the proprietor (1 lakh cash + 50,000 goods).
• Significance: The basis for starting the business.
• Example: Total Capital of 1.5 lakh in the business.

Proprietor (स्वामी)

• Definition: Person who starts the business and brings in the capital.
• Example: The speaker who decided to start the Rasgulla business.

Goods (माल/सामान)

• Definition: Items the business deals with (buy and sell).
• Example: Various flavored Rasgullas (Chocolate, Strawberry, Mango).

Liabilities (देयता)

• Definition: Amount owed by the business.
• Example: Loan of 10 lakh rupees from the bank.
• Types: Non-Current Liabilities (long-term like bank loans), Current Liabilities (short-term like creditors).

Drawings (निकासी)

• Definition: Amount taken out from business for personal use.
• Example: 30,000 rupees withdrawn (20,000 cash + 10,000 goods).
• Impact: Reduces the capital of the business.

Property and Equipment

Assets (संपत्ति)

• Definition: Economic resources used in business for future benefits.
• Types:
  • Non-Current Assets: Long-term, not for resale, e.g., furniture, computers.
  • Current Assets: Can be converted to cash within a year, e.g., Rasgullas stock.
• Purpose: Helps in running the business.

Depreciation (मूल्यह्रास)

• Definition: Reduction in the value of assets over time.
• Example: Decrease in value of furniture/machinery.

Intangible Assets (अमूर्त संपत्ति)

• Definition: Assets that cannot be touched, seen, but have value.
• Example: Goodwill, patents, software.

Transactions and Accounting

Vouchers (प्रमाण पत्र)

• Definition: Evidence of a business transaction.
• Example: Bills, invoices, receipts.

Revenue (राजस्व)

• Definition: Income from business operations.
• Types:
  • Operating Revenue: From core business activities, e.g., selling Rasgullas.
  • Non-operating Revenue: From other activities, e.g., interest income.

Expenses (खर्चे)

• Definition: Costs incurred to earn revenue.
• Types:
  • Capital Expenditure: Long-term benefits, e.g., buying equipment.
  • Revenue Expenditure: Short-term benefits, e.g., salaries, electricity.

Income (आय)

• Definition: Revenue - Expenses.
• Example: Profit or loss after deducting expenses from revenue.

Loan (ऋण)

• Definition: Amount borrowed to be repaid with interest.
• Example: Loan taken from a bank.

Financial Statements

• Trading Account: To record direct incomes and expenses.
• Profit and Loss Account: To determine net profit or loss.
• Balance Sheet: To show financial position (assets and liabilities).

Practical Example Summary

• Scenario: Mr. Gopal's garment business with transactions like investment, purchases, sales, and expenses.
• Objective: To identify various terms like capital, assets, liabilities, creditors, and more through practical examples.

Conclusion

• Review and understand each accounting term thoroughly.
• Apply these terms to practical scenarios for a clear understanding.
• Revisit lecture concepts if needed to solidify knowledge.