Kinds of Stock
Raw Material – S
Work in progress – It is a stock that is in the process of being Produced, they are partly finished goods.
Finished Goods – S
Debtor – Debtor is a person to whom firm has sold goods or services on credit, in ordinary course of Business.
Bill Receivable – It means a bill of exchange accepted by a debtor, the amount of which will be received on a specified date.
Trade Receivable – Debtor and Bills Receivable both is called trade Receivable.
Creditor – Creditor is a person “Supplier” from whom an enterprise “Firm” purchases goods or services on creditors.
Bill Payable – Bill Payable means a bill of exchange accepted by firm to pay fixed amount on specified date.
Trade Payable – Creditor and Bills payable both is called trade payable.
Expenditure (Expenses) – Go to outside money from by business for any reason that is called expenditure.
It is divided into two parts…
Expenditure
Revenue Expenditure – It is an amount paid or payable “expenditure incurred”, the benefit of which is consume with in current accounting period. It is also called revenue expenditure. Revenue expenditures are “short-term expenses” used in the current period with in one year.
Example – Rent paid or payable, Salary paid or payable, Interest paid or payable, wages paid or payable, electricity bill paid or payable, telephone bill paid or payable, printing charges paid or payable all must be current year.
Capital Expenditure – It is an expenditure incurred, the benefit of which will be consumed in future. It is also called “asset”. Such expenditures are incurred to acquire assets or to increase the efficiency of the asset.
Example – property, plants, buildings, technology
Assets – Assets can be divided into 3 parts-
Non-Current Assets – Those assets which are held by the business from a long-term point of view, for more than one year
Example – Building, Plants, Machine, Furniture, Goodwill, Long term investment, etc.
Fixed Assets – It is part of non-current assets
Tangible Fixed Assets – Those fixed assets which have their physical existence. It means they can be seen, touched.
Example – Building, Plants, Machine, Furniture, Computer.
Intangible Fixed Assets – Those fixed assets which do not have their physical existence. They Can Not be touched or seen.
Example – Goodwill, Trade mark, Patience, Computer software, Brand.
Current Assets – Those assets which are held by the firm with the purpose of converting them into cash or for using them with in a short period, within one year.
Example – Stock, Debtors, Bills Receivable, Cash, Bank, etc.
Drawings – It is the amount withdrawal or goods taken by proprietor “Owner” for the personal use.
Revenue Receipt – Amount receipt or receivable from sale of goods and services in normal course of business, Interest on deposited, etc.
Note – It is also called revenue of the business.
Capital Receipt – Amount receipt or receivable from Sources which are not in revenue in nature.
Example – “Sale of Assets” Bank Loan, Sale of Furniture, Sale of Machine, Sale of Building, etc.
Profit / Income – “Revenue – Expenses” or “Revenue Receipt – Revenue Payment”
Note – For calculating profit of the business, we do not consider “Capital receipt & capital Expenditure”.