“What is Accounting”

ERP = ENTERPRISES RESOURCE PLANING

Accounting:-

Accounting is defined as systematic summarized recording of day to day business transactions in the books of account.  In other words the books of your company can be treated as medical reports that show the health of your company.

To learn accounting, it is necessary to understand the final amounts of Debit & credits, assets & liabilities, income & expenses to prepare of maintain accounts systematically & correctly.

what is Debit?:-

The things which are coming into the business are known as Debit.

what is Credit?:-

The things which are going from the business are known as Credit.

What is Capital?:-

The owner of the business who have invested in the business who have invested amount in the business to start a business that is loan given by Proprietor  to the business which also mean that capital is one of the liabilities of  business.

What is Asset?:-

The thing / items which are not a regularly Purchase or Sold are known as Assets. E.g.:-Furniture, Building, Machinery, Cash, unsold stock, Vehicle, due from the debtors.

What is Liabilities? :-

Liabilities is that sum of money which the business owns to outsiders for ex. Capital (amount invested by proprietor to start the business)
Loan taken from bank or friends, relatives, money to be given creditor (supplier).

What is accounting Transaction? :-

Transaction means transfer of money   from one party to another party.  For Ex: – sale of computer Purchase of furniture.

what is Cash Transaction?:-

When asset or goods are sold on cash or purchased on cash then this transaction is known as cash transaction.

What is Credit Transaction?:-

When asset or goods are sold on credit or purchased on credit then this transaction is known as credit transaction

What is Barter transaction?: –

when goods or services exchanged with other goods or services

What is Sundry Creditor? :-

The person from we are purchasing goods & we will pay the amount in future it’s called Sundry Creditor.

What is Sundry Debtor? :-

The person from we are Sold goods & he will pay the amount in future it’s called Sundry Debtor.

What is Drawings? :-

Drawing refers to sum of value of goods and cash withdrawn by a businessman from the business from time to time for self-use.

What is Goods? :-

The things or items which are regularly Purchase / Sold are known as Goods.

What is Bad Debt? :-

Bad debt is a loss which is incurred by the business on account of non-collection of the Debt from debtors. It is treated as bad debts when all hopes or chances of recovery of debt are lost. Bad debt reduces the inflow of cash.

What is Narration?:-

Means brief explanation of an entry. Always start with the word “Being”.