Accounting Terminology
Transaction
Cash transaction
Credit transaction
The transaction involves cash receipt or payment.
will not have ‘cash’ either received or paid, but gives rise to receivables and payables relationship.
Proprietor / Trader
The person who makes the investment and bears risks connected with the business
Sales
the sale of those goods in which business normally deals
and which were bought with the prime intention of resale.
cash sales
credit sales
Purchases
Buying of goods by the business for selling them to customers
credit purchases
cash purchases
cash is paid immediately for the purchase
the payment is postponed
Sales Returns / Returns Inwards
the returns of goods from customer previously bought from the business
reduce the sales /incomes generated from the business
Purchase Returns / Returns Outwards
returns of goods to supplier the business previously bought
Accounts Receivable / Receivables / Debtors
A person who owes money to the business mostly on account of credit sales of goods
Accounts Payables / Payables / Creditors
A person to whom money is owing by the business
Goods
items which are bought for RESALE for profit are known as Goods
Inventory / Stock
The goods purchased are for selling, if the goods are not sold out fully, a part of the total goods purchased is kept with the business until it is sold out
Carriage inwards
shipping and handling costs incurred by a business that is receiving goods from suppliers.
Carriage outwards
those expenses which the business has to incur when he sells goods to the customer
Trade Discount
purpose of trade discount is to attract the customer to buy more by offering a cheaper price
Cash Discount
a deduction allowed by the business in order to motivate the customer to pay within a specified time.
Discount received
Discounts allowed
When the business of goods or services gives a discount to the customer upon payment.
the discount offered by the supplier upon payment of goods or services purchase on credit.
the exchange of money or money worth from one account
to another account