Explain the following terms : (i) Capital and drawings (ii) Capital receipts and revenue receipts (iii) Payable and receivable (iv) Debit and credit (v) Account (vi) voucher
Answers
Answer:
(i)Capital:
Capital is a large sum of money which you use to start a business, or which you invest in order to make more money.
Drawings:
Drawings refers to the act of withdrawing cash or assets from the company by the owners for personal use.
(ii)Capital receipts:
Capital receipts are income from non-recurring streams non usual operations.
Revenue Receipts:
Revenue receipts are income that is earned from day to day operations.
(iii)Payable:
Accounts payable are amounts due to vendors or suppliers for goods or services received that have not yet been paid for.
Receivable:
Accounts receivable is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers.
(iv)Debit:
A debit is an accounting entry that creates a decrease in liabilities or an increase in assets.
Credit:
A credit is an entry made on the right side of an account.
(v) Account:
In bookkeeping, an account refers to assets, liabilities, income, expenses, and equity, as represented by individual ledger pages, to which changes in value are chronologically recorded with debit and credit entries.
Three types of Accounts are there,They are
i)Real Account
ii) Personal Account
iii)Nominal Account
vi) Voucher:
A voucher is a document used by a company's accounts payable department containing the supporting documents for an invoice.