Business Students
PREPARATION FOR NTS, CTS, FPSC, PPSC JOBS FOR BUSINESS STUDENTSNTS PAST PAPERS MCQsNTS PAPERS PREPARATION FOR PUNJAB FOOD AUTHORITY JOB 2019PUNJAB FOOD AUTHORITY PAPERS PREPARATION
Accounting Basic Terms
In this case
the customer is allowed to deposit or withdraw money as and when he likes. He
may thus deposit or withdraw money several times in a day if he likes. Usually
the businessmen open this type of account. No interest is allowed by first
class banks on current account deposits but some banks do allow interest in
case the balance does not fall below a certain minimum limit.
It is also
called profit and loss account. This account as its name suggests is for those persons
who want to make small savings. In this case deposits can be made only up to a
certain amount and withdrawals are allowed only twice or thrice a week, not
exceeding a certain amount. This type of account is opened by small retailers
or mostly by wage-earners and salary-persons. The rate of interest on this type
of account depends on the amount of profit earned by the bank. It generally
varies between Six % to Nine % per annul.
In this type
of account, a certain amount is deposited for a fixed period such as six
months, one year or longer. The amount cannot be withdrawn till the expiration
of fixed period. The interest allowed on fixed deposit varies with the period
for which the deposit is made.
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| Accounting Terms |
Bearer Cheque?
It is one on
which the phrase of bearer is written after the name of the payee. It is
payable to the bearet, holder of possessor, i.e. anyone who may present it at
the bank. The bank is under no liability to ascertain that the payment is made
to the right person.
Order Cheque?
It is Cheque
made payable to a certain person or order. It is a cheque on which the phrase
or order is written after the name of the payee. It a cheque is made payable to
a certain person without the addition of the word bearer or order thereto, it
is regarded as an order cheque. It can be transferred only by endorsement and
delivery.
Crossed
Cheque?
When Two
Parallel lines are drawn across the face of a cheque, it is said to be a
crossed cheque. A crossed cheque cannot be encashed at the counter but can be
collected only by a bank from the drawee bank. Crossing may be general or
special.
The Cash book
is a book to original entry in which transactions relating only to cash
receipts and payments are recorded in detail. When cash is received it is
entered on the debit or left hand side and when cash is paid, the cash is
recorded in credit side of the cash book.
Voucher?
Voucher is a
document containing evidences of payments and receipts. For every entry made in
the book of accounts there must be a proper voucher.
Kinds of Cash Books
There are
three types of cash book.
It records
only cash receipts and payments. It has only one money column on each of the
debit and credit sides of the book. All the cash receipts are entered on the
debit side and the cash payments on credit side.
A double
column cash book is one which consists of two separate columns on the debit
side as well as credit side for recording cash and discount. In many concerns it
is customary for the trader to allow or to receive small allowances off or
against the dues.
Three Column
Cash Book?
It is one in
which there are three columns on each side debit and credit side which one is
used to record cash transactions, the second is utilized for bank transactions
and the third is to records discount received or paid.
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| Accounting Concepts |
The Purchase
Book?
Purchases day
book is a book of original entry maintained to record credit purchases. The
student must note that cash purchases will not be entered in this book because
entries in respect of cash purchases must have been in the cash book.
Transfer
Entries?
When accounts
are transferred from one account to another for combination of allied items. It
is necessary to pass transfer entry. E.g. Drawings is transferred from the
drawings account to the Capital Account to find out the net Capital.
Adjusting
Entries?
Modification
of the accounts at the end of an accounting period is called adjustments. If
there be any event affecting the related period of accounts but left out of the
books, the same should be incorporated in the books before the preparation of
the Final Accounts. His is done by means of adjusting entries through the
Journal Proper.
When an error
is detected in the books, the same is rectified through an entry in the Journal
Proper. It is called Rectification Entry.
Trading
Account?
A Trading
Account is an account which contains “in summarized form” all the transactions,
occurring, throughout the trading period, in commodities in which he deals and
which gives the gross trading result. Trading Account is the account which is
prepared to determine the Gross Profit or the Gross Loss of a trader.
Direct
Expenses?
Direct
expenses are those expense which are incurred to convert raw-materials into
finished goods or which may be regarded as a part of the cost of purchasing the
goods, e.g. wages paid be a manufacturer to construct furniture out of raw
goods, All the direct expense are charged to the Trading Account.
Wages?
This item
usually signifies some hourly, daily or piecework remuneration paid to
laborers. It is direct expenditure and should be charged to Trading Account.
Carriage
Inward?
Carriage
inward are the conveyance expenses incurred to bring the goods purchased in the
Shop.
The Cartage
charges on goods purchased are direct expense and should be debited to trading account.
Freight?
Freight is the
charge made for conveyance of goods by sea. Freight on goods purchased is
charged is Trading Account.
Customs Duty,
Octoroi Duty?
When goods are
purchased from a foreign country import duly will be payable. When goods are
received from another city, the municipal corporation may charge octoroi duty.
All duties on goods purchased should be debited to Trading Account.
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