The previous article has highlighted the common terminologies of the accounting, here we will illustrate about the terms which are used in day to day basis. In order to work in the day to day accounting the understandings of these terms are mandatory. Have a look to the terms;Sponsored Links
Credit: On the accounting the credit and debit will be place on the same line. And to each credit there must be a debit. The double entry record keeping system has dignified the use of credit. To be simpler the credit side contains all the income and gains as well as all the liabilities. Under the concept of accounting the giver must be credited and the correspondence head will be debited. The entry has to be maintained in the ledger and the journal as well.
Debit: The debit indicates the opposite of credit. Where ever there will be a credit there must be debit of same amount. Unlike the credit the debit side of the accounting book contains all expenses and losses occurred to the business and all the asset will also comes under the debit side.Sponsored Links
The receiver accounts should be debited with a similar credit. Under the concept f double entry system of book keeping the debit will decrease a liability or an equity account of the business house.
General ledger: The general ledger in the book where you will find all the entry for your business. To be more specific the all the credit and the debit will be entered to the ledger book. The general ledger has a great importance while preparing the balance sheet. The maintenance of the ledger book requires special experience so that a fool proof ledger book can be maintained. In fact with the invent computerized accounting the concept of the general ledger has diminished. Still the importance of the ledger to the business can’t be ignored at any cost.Sponsored Links
Journal: The ledger is a voluminous entry where as the journal is a single entry. In general sense a journal is considered as the diary for every business. Each and every single transaction of your business will be first entered through the journal and finally it will be entered into the ledger. Hence every possible measure should be taken for a correct entry of the journal.Sponsored Links
Inventory: For every business the term carries a lot of importance. The inventory represents the volume of your business. The amount of stock you have purchased for your business will comes under the inventory. The more the inventory for your business the more will be the asset for your business. During the preparation of the balance sheet the inventory will be shown under the asset side of the balance sheet. However it has to be kept in mind that you are not converting the cash into inventory. If you have started converting the cash into inventory, at certain point of time your business organization will run out of the cash.