Discover Accounting Definitions I

Around the world ,with all times,past,present and future the human try to determine for every thing he live with
or use it definition According to the scientific experimental entrance to facilitate the understanding of this sciences .
following this steps enable us say that Accounting is a special science was derived from Social sciences founded by the human
So we should discover every term with its definition in order to conduct the function of Accounting in enterprises .
our tour commence from wider to narrower in Phase's definition of Accounting Cycle because of report's importance as shown here
First the Balance Sheet Words exhibit with :
- Accounting Equation :
Is a useful rule which helps when assembling the balance sheet figures. The rule which is always true is that:
Assets - Liabilities =Capital
Fixed Assets + Current Assets-Current Liabilities - Long term Liabilities = Capital + profit - drawings
- Accounting ratios :
Used to help make sense of the figures and include the following categories:
* Profitability ratios , used to compare the profitability of one company with another or of one company over time.
* Liquidity ratios, used to compare the liquidity of one company with another or of one company over time.
* Investment ratios, used by potential investors when making investment decisions.
* Efficiency ratios, used to compare company efficiency with others or with itself from one year to another.

Accounting ratios are only useful when used to compare:

One company's results over a period of time.
One company's results with another company. It is best to compare with the best
The company's results with those expected. It is useful to use budgets for this purpose

- Balance sheet :
It's financial statement showed a brief about the transaction of any firm representative in two sections
Assets and Liabilities pointed in one time , sometimes refer to it as "Snapshot"

- Accrual :
It's an amount unaccounted for yet , still owed and needs to be estimated and then added to the expenses deducted from the profit
in the (Profit and loss account) , The same amount also needs to be added to the Creditor account in the current liabilities section in the Balance sheet .

- Assets :
It's an item of value owned by the business means (Firm) .

- Current Assets :
Assets were expected to be used up and replaced within one year (commonly the Accounting period ) , Sometimes refer to it as "short term assets"
and this assets were distinguished with liquidity .

Minutely as :

* Cash : Amount of money kept in petty cash tin at the office of the firm .
* Bank : Amount of money kept in bank which the firm deal with .
* Stocks of finished goods or raw materials : This amount is also referred to as closing stock , appears both in the Balance sheet and in the Profit and Loss Account
* Debtors : Amounts owed to the business from its customer comes in two sides :

- Cash customers which pay for goods at the time of sales .
- Credit customers which pay for goods at later date
* Prepayment : Amount paid in advance (earlier time) .
* Drawings : Assets withdrawn from the business by the owners .

- Fixed Assets :
Assets used in business and not included in the purposes of resale representative in more one item
* Land . * Building used to be the place which the operations of the business done . * Motor vehicles Etc.

- Goodwill :
Type of Fixed Assets but in moral shape classified in two categories :
* inherent goodwill (natural moral value) * purchases goodwill
Any way The type of goodwill should not appear on the Balance Sheet .


Best hopes ,
Mostafa