Question

Explain and give examples of each of the following accounting terms :

a) Expenses b) Drawing c) Gain

d) Revenue e) Sales f) Cost

g) Asset h) Capital i) Goods

j) Fictitious Assets k) Working Capital l) Business transaction​

Answer 1

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Answer 2

Answer:

1. An expense is the cost of operations that a company incurs to generate revenue. As the popular saying goes, “it costs money to make money.” Common expenses include payments to suppliers, employee wages, factory leases, and equipment depreciation.
2. A drawing account is an accounting record maintained to track money withdrawn from a business by its owners. A drawing account is used primarily for businesses that are taxed as sole proprietorships or partnerships.
3. A gain is an increase in the value of an asset or property. ... That said, a gain only truly matters when the asset is sold and the gains are realized as profit. An asset may see many unrealized gains and losses between purchase and sale because the market is constantly reassessing the value of assets.
4. Revenue is the income generated from normal business operations and includes discounts and deductions for returned merchandise. It is the top line or gross income figure from which costs are subtracted to determine net income. Sales Revenue formula.
5. In bookkeeping, accounting, and finance, Net sales are operating revenues earned by a company for selling its products or rendering its services. Also referred to as revenue, they are reported directly on the income statement as Sales or Net sales. ... A sale is a transfer of property for money or credit.
6. In accounting, the term cost refers to the monetary value of expenditures for raw materials, equipment, supplies, services, labor, products, etc. It is an amount that is recorded as an expense in bookkeeping records.
7. An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. Assets are reported on a company's balance sheet and are bought or created to increase a firm's value or benefit the firm's operations.
8. Capital is a term for financial assets, such as funds held in deposit accounts and/or funds obtained from special financing sources. ... Capital assets are assets of a business found on either the current or long-term portion of the balance sheet.
9. The things which are bought and sold by business are called goods. ... In accounting, when goods are purchased it is written as purchases. When goods are sold it is written as sales. It is written as a stock if remain unsold at the end of the year.
10. Fictitious asset is not a real asset but deferred expenses that are shown in assets in the balance sheet. ... Expenses or losses that are not written off during the accounting period of occurrence because they give long-term benefit over a period of time are categorized as fictitious assets.
11. Working capital, also known as net working capital (NWC), is the difference between a company's current assets, such as cash, accounts receivable (customers' unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, such as accounts payable.
12. A business transaction is an event involving an interchange of goods, money or services between two or more parties. The transaction can be as brief as a cash purchase or as long-lasting as a service contract extending over years.