Since this capital is invested by the owner of the business, then this capital is also a liability according to the business.ĥ) Debtor:- From which business has to take a fixed amount is called Debtor.Ħ) Creditor :- Those who have to give a certain amount to our business are called creditors.ħ) Business Transaction :- is a financial event which is related to business and which has an impact on the financial position of the company. This capital is in the form of cash, goods or assets. For example – loan taken from bank, purchase of goods on credit.Ĥ) Capital :- Capital is the investment made by the owner of the business. For example- Building, Vehicle, Machinery, Furniture.ģ) Liabilities :- Liabilities are given by others to the business. Profits depend on the purchase and sale of goods.Ģ) Assets :- Assets are valuable things, which are necessary for the business and are the assets of the business.
For example – A grocery shop has soap, oil etc. So first we understand the meaning of these words –ġ) Goods:- Goods are bought and sold regularly and primarily in business. While learning accounting, we have to use some words regularly. With the above-mentioned advantages, we can easily understand that accounting is the soul of business.
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