Giving Examples, explain Each of the Following Accounting Terms:- Accounting

Giving examples, explain each of the following accounting terms:

• Fixed assets 
• Revenue 
• Expenses
• Gain 
• Profit 
• Capital
• Short-term liabilities

Fixed assets: Fixed Assets refer to those assets which are held for continued use in the business to produce goods and services and not meant for resale.

Example:

1. Land and Building
2. Plant and Machinery,
3. Office furniture,
4. Vehicles such as company trucks.

Revenue: Revenues refer to the amount received from the day-to-day activities of the business entity.

Example:

1. Commission received,
2. dividend,
3. Sales
4. Interest revenue

Expenses: An expense in accounting is the money spent, or costs incurred, by a business in its effort to generate revenues.

Example:

1. Wages,
2. salaries,
3. commissions,
4. Repairs and maintenance,
5. Rent.

Gain: A profit that arises from events or transactions which are incidental to business such as the sale of fixed assets, appreciation in the value of an asset.

Example:

1. profit on the sale of fixed assets, 
2. appreciation in the value of an asset, 
3. profit on the sale of an investment.

Profit: This refers to the excess of revenue over the expense. It is normally categorized into gross profit or net profit.

1. Goods sold above its cost.

Capital: The capital means the assets and cash in a business, It refers to the amount invested by the owner of a firm. It may be in form of cash or asset.

Example:

1. cash, 
2. machinery, 
3. receivable accounts, 
4. property, or houses.

Short-term liabilities: Short-term liabilities are the liabilities that are incurred to be paid or are payable within a year.

Example:

1. Bank overdraft creditors,
2. Bills payable,
3. Outstanding wages,
4. Short-term loans.

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Introduction to Accounting
Class 11-Accountancy