BASIC ACCOUNTING CONCEPTS
The balance sheet gives us the financial position of the business and profit
and loss account. Accounting is nothing but recording classifying and
summarizing financial data into meaningful formats that is all accounting.
The accounting process is very simple accounting process starts with the
source document. The process from source document till trial balance it is
called bookkeeping. An asset is a resource controlled by an entity as a
result of past events and from which future economic benefits are expected
to flow to the entity that is what an asset is now previously we used to say
that asset is something that the company owns if a company owns the land
and building then that's an asset of the company
Expenses are the cost of operations that a company incurs to generate
revenue and from which no further benefit is expected is the main
difference between certain expenses that you know in acid we get future
economic benefit but here once you incur the expenses that mean you
have taken the benefit already the benefit is already taken. so see here a
present obligation of the entity to transfer an economic resource as a result
of past event there will be some past event, for example, you purchase you
know ten thousand worth of goods yeah and you didn't pay then you have
a present obligation to pay that person pay to pay your supplier. If you owe
money to your supplier then that supplier that creditor he will have claim on
your total assets of the company. Capital is simply whatever money that is
brought in by the owners of the company that's called capital or equity
share capital or preferential capital simple as that. The technical definition
would be it is the claim of owners in the total asset of the. company after
deducting all it 's liabilities. shareholders because they're in companies the
capital is divided into small units of shares.
The balance sheet gives us the financial position of the business and profit
and loss account. Accounting is nothing but recording classifying and
summarizing financial data into meaningful formats that is all accounting.
The accounting process is very simple accounting process starts with the
source document. The process from source document till trial balance it is
called bookkeeping. An asset is a resource controlled by an entity as a
result of past events and from which future economic benefits are expected
to flow to the entity that is what an asset is now previously we used to say
that asset is something that the company owns if a company owns the land
and building then that's an asset of the company
Expenses are the cost of operations that a company incurs to generate
revenue and from which no further benefit is expected is the main
difference between certain expenses that you know in acid we get future
economic benefit but here once you incur the expenses that mean you
have taken the benefit already the benefit is already taken. so see here a
present obligation of the entity to transfer an economic resource as a result
of past event there will be some past event, for example, you purchase you
know ten thousand worth of goods yeah and you didn't pay then you have
a present obligation to pay that person pay to pay your supplier. If you owe
money to your supplier then that supplier that creditor he will have claim on
your total assets of the company. Capital is simply whatever money that is
brought in by the owners of the company that's called capital or equity
share capital or preferential capital simple as that. The technical definition
would be it is the claim of owners in the total asset of the. company after
deducting all it 's liabilities. shareholders because they're in companies the
capital is divided into small units of shares.
