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    Ac 3

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    accounting notes 3

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    1 views16 pages

    Ac 3

    Uploaded by

    Khushbuzaman
    accounting notes 3

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 16

    GED 307

    Financial and Managerial


    Accounting

    Lecture 3: Accounting Terms

    Rabeya Akter
    Lecturer, GBS , Green University
    Re-calling Last lecture:
    Accounting standards refer to a set of guidelines, rules and principles set up by a regulatory
    board or the government that serves as framework for accounting policies and practices.

    Standards

    GAAP • rules-based 1. Historical Cost Principles


    • FASB (Asset are recorded at the
    • USA cost price)
    2. Fair Value Principles (assets
    and liabilities are recorded at
    fair value)

    IFRS • principles-based
    • IASB
    • NON-US
    Basic Accounting Terms
    Asset

    Asset

    Non-current/Fix
    ed Current

    Tangible
    Intangible
    Asset
    Current Asset Vs Non-Current/Fixed Asset

    Current assets are assets that


    Noncurrent /Fixed assets are
    are expected to be converted to
    those that are considered
    cash within a year.
    long-term
    Current Asset vs Fixed Asset
    An intangible asset is an
    identifiable
    non-monetary asset
    without physical
    substance.
    Basic Accounting Terms
    Cash Basis Accounting Vs Accrual Basis Accounting
    Accounts Receivable Vs Accounts Payable

    Credit
    Credit Sale Purchase

    Accounts Accounts
    Receivable Payable

    Short term asset Short term Liabilities


    Basic Accounting Terms: Review

    Terms Short Explanation


    Form
    Accounts The amount of money owed by customers or clients to a business after
    AR
    receivable goods or services have been delivered and/or used.
    The amount of money a company owes creditors (suppliers, etc.) in return
    Accounts payable AP
    for goods and/or services they have delivered.
    Accrual basis Accrual basis accounting is the process of recording financial transactions
    accounting when the income is earned or the expense incurred .
    Cash basis accounting is the process of recording financial transactions
    Cash Basis
    when the revenue is received in cash or the expense is paid in cash.
    Accounting

    Asset (Current, An asset is any company possession with monetary value.


    CA, FA
    Fixed)
    Basic Accounting Terms
    Terms Short Explanation
    Form
    Bad debt refers to loans or outstanding balances owed that are no longer
    Bad debt Expense
    deemed recoverable and must be written off.

    Business entity Business entity refers to the legal structure of a business.

    A bond payable is a promise to pay a series of payments over time and a


    Bonds Payable
    fixed amount at maturity.
    Buildings is a fixed asset account that contains the carrying amount of the
    Buildings
    buildings owned by an entity.
    Cash is classified as a current asset on the balance sheet and is therefore
    Cash
    increased on the debit side and decreased on the credit side.

    Common Stocks Common stock is a security that represents ownership in a corporation

    Capital includes goods or cash brought into the business by the owners or
    Capital
    shareholders.
    Basic Accounting Terms
    Terms Short Explanation
    Form
    Cash basis accounting is one of the most common methods of business
    Cash basis
    accounting. Since it focuses on cash transactions, it doesn’t recognize
    accounting
    accounts payable or receivable.
    Cash flow is the expense or revenue a company expects to generate from
    Cash flow
    its business activities over a certain period.
    Cost (Fixed, cost refers to the monetary value of expenditures for raw materials,
    FC, VC
    Variable) equipment, supplies, services, labor, products, etc
    The expenses incurred to produce goods or services that a business sells.
    Cost of goods sold COGS
    They are considered direct costs.
    A credit is an increase in a liability or equity account, or a decrease in an
    Credit CR
    asset or expense account.
    A debit is an increase in an asset or expense account, or a decrease in a
    Debit DR
    liability or equity account.
    Depreciation is the term that accounts for the loss of value in an asset over
    Depreciation
    time.
    Interactive
    Session

    5 min – 7 min
    In-class Participation

    1. Identify and Classify the assets from the following picture :

    Instruction : Answer the above questions and submit the photo of


    your answer scripts within 5 minutes of class completion.
    1
    2
    3

    Hint: Accounts Receivable 6


    5

    4
    7

    Identify and
    Classify Assets

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