- CAPITAL: The amount (money or assets) which the proprietor has invested in the firm or can claim from the firm.
- ASSETS: Anything which will help firm in getting cash or benefit in future.
Fixed Assets – Assets which are purchased for the purpose of operating of the business but not for the resale. Ex.- land, building, machinery, furniture, car etc.
Current Assets – Assets of the business which are kept for the short term for converting into cash from sale. Ex. Inventory, bank balance, debtors etc.
- LIABILITY: It means the amount which firm owes to the outsiders.
Long term liability – Payable after more than 1 yr. Ex. Term Loan
Current/ Short term liability – Payable within 1 yr. Ex. Creditors
- DEBTORS: A person who owes money to the firm mostly on account of credit sales of goods.
- CREDITORS: A person to whom money is owing by the firm
- REVENUE: The amount of money that a company actually receives during a specific period. It is the “top line” or “gross income” figure from which costs are subtracted to determine net income.
- EXPENSES: The amount spent in order to produce & sell the goods & services which produce the revenue.