BASIC FINANCING

CONCEPTS

WHAT IS ACCOUNTING ?
Itis asystematic processof identifying,
recording, measuring, classifying,
verifying, summarizing,interpretingand
communicating financialinformation.
It revealsprofitor loss for a givenperiod,

WHAT IS PROFIT AND LOSS ACCOUNT ?

A profit and loss statement (P&L) is

a financial statement that
summarizes the revenues, costs
and expenses incurred during a
specific period of time, usually a
fiscal quarter or year.

WHAT IS BALANCESHEET ?
Astatementofacompany'sassets,liabilities,ands
tockholder
equityatagivenperiodoftime,suchastheendof
aquarteroryear.
Abalancesheetisarecordofwhatacompanyhas
andhowithascometohaveit.

Thebalancesheetadherestothefollowing
formula:
Assets=Liabilities+Shareholders'Equity

WHAT IS ASSETS ?
Thingsthatareresourcesownedbyacompany

andwhichhavefutureeconomicvalue.
Theyaredividedintocurrentassets,thosewhich
canbeconvertedtocashinoneyearorless;and
non-currentorlong-termassets,whichcannot

WHAT IS FIXED ASSETS ?

Fixed assets are those assets which are
purchased for the purpose of operating the
business not for the resale
E.g :- Land & Buildings , Machinery ,
Furniture

WHAT IS CURRENT ASSETS ?

Current assets are those assets of the
business which are kept for short term for
converting into cash
E.g:- Debtors , Bills receivables , Bank
balances , Inventories , Marketable
securities

WHAT IS LIABILITIES ?

Liabilities are the money that a company

owes to outside parties, from bills it has to
pay to suppliers to interest onbondsit has
issued to creditors to rent, utilities and
salaries.

CURRENT & LONG TERM LIABILITIES

Current liabilities are those that are

due within one year and are listed
in order of their due date.
Long-term liabilities are due at any
point after one year.

WHAT IS SHARESHOLDER EQUITY ?

Shareholders' equity is the money
attributable to a business' owners, meaning
its shareholders. It is also known as "net
assets,
since it is equivalent to the total assets of a
company minus its liabilities, that is, the
debt it owes to non-shareholder

WHAT IS DEBTOR ?
A person who owes money to the firm ,
generally on account of credit sale of good
is called a debtor.
E.g :- when goods are sold to a person on
the credit basis that person pays price in the
future. He is called as debtor.

WHAT IS CREDITORS ?
A person to whom the firm owes money is
called a creditor
e.g:- Mr. K.V is a creditor to the firm when
goods are purchased on credit from him.

WHAT IS GROSS PROFIT ?

Gross profit is the difference between sales
revenue or the proceeds of goods sold and
services rendered over its direct cost
Gross profit = Sales Cost of goods sold

WHAT IS NET PROFIT ?

Net profit is the profit made after allowing
for all expenses . In case expenses more than
incomes it denoted as Net loss.
Net profit = Gross profit non operating
expenses

THANK YOU