Important Accounting Terms with explain for exams

Assets:

Assets are valuable and economic resources of an enterprise useful in its operations. Assets can be broadly classified as:

1. Current assets: Current assets are those assets which are held for short period and can be converted into cash within one year. For example: debtors, stock etc.

2. Non-current assets: Non-current assets are those assets which are hold for long period and used for normal business operation. For example: land, building, machinery etc. They are further classified into.

a) Tangible assets: Tangible assets are those assets which have physical existence and can be seen and touched. For example: furniture, machinery etc.

b) Intangible assets: Intangible assets are those assets which have no physical existence and can be felt by operation. For example: goadwill, etc.

Liabilities:

Liabilities are obligations or debts that an enterprise has to pay after some time in the future.

Liabilities can be classified as:

1. Current liabilities: Current liabilities are obligation or debts that are payable within a period of one year. For example creditors, bill payable etc.

2. Non-current liabilities: Non-current liabilities are those obligation or debts that are payable after a period of one year Example: bank loan, debentures etc.

Receipt:

1. Revenue receipt : revenue receipt are those receipt which are offered by normal operation of business like money received by sale of business products.

2. Capital receipt : capital receipt are those receipt which are occurred by other than business operations like money received by sale of fixed assets.