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

Concept Introduction:-

A sentence which has a subject, verb, object, and modifiers.

Explanation:-

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$a)$ Expenses-An expense is the cost of operations that a company incurs to generate revenue. Example-Cost of goods sold for ordinary business operations.

$b)$ Drawing-Drawing, in accounting, refers to the action of taking funds from an account or company holdings for individual use. Example-a withdrawal of cash or other assets from the proprietorship/partnership business by the Owner/Promoter of the business/enterprise for personal use.

$c)$ Gain-A gain is a general increase in the value of an asset or property. Example-when you purchase like say a piece of land.

$d)$ Often the term income is used instead of revenues. Examples of revenue accounts include: Sales, Service Revenues.

$e)$ Sales-Sales in accounting is a term that refers to any operating revenues that a company earns through its business activities, such as selling goods, services, products, etc.

$f)$ Cost-In accounting, cost is defined as the cash amount (or the cash equivalent) given up for an asset. Cost includes all costs necessary to get an asset in place and ready for use. For example, the cost of an item in inventory also includes the item's freight-in cost.

$g)$ Asset-An asset is anything that has current or future economic value to a business. Essentially, for businesses, assets include everything controlled and owned by the company that's currently valuable or could provide monetary benefit in the future. Examples include patents, machinery, and investments.

$h)$ Capital-The capital means the assets and cash in a business. Capital may either be cash, machinery, receivable accounts, property, or houses. Capital may also reflect the capital gained in a business or the assets of the owner in a company.

$i)$ Goods-The things which are bought and sold by businesses are called goods. Goods may be raw material work in progress of finished goods. In accounting, when goods are purchased it is written as purchases.

$j)$ Fictitious Assets-The assets which are valueless but are shown in the financial statements or the expenses which are treated as assets are known as Fictitious Assets. For example, preliminary expenses which incur at the time of the establishment of the company.

$k)$ Working capital-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 and debts.

$l)$ Business transaction​-A business transaction is an economic event with a third party that is recorded in an organization's accounting system. Such a transaction must be measurable in money. Examples of business transactions are: Buying insurance from an insurer. Buying inventory from a supplier.

Final Answer:-

The correct answer is the accounting terms that are used with examples.

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