Ways to increase revenue and profit

Revenue is the income earned by the business entity through its day to day operations. Profit is the gain of the company i.e. when the amount earned exceeds the amount spent, the result would be profit. If revenue is the backbone then profit is the lifeblood of the business.

Difference Between Revenue and Profit

Revenue is the income earned by the business entity through its day to day operations. Profit is the gain of the company i.e. when the amount earned exceeds the amount spent, the result would be profit. If revenue is the backbone then profit is the lifeblood of the business.

What iscapital expenditure and revenue expenditure

A capital expenditure

1.It is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Usually the cost is recorded in an account classified as Property, Plant and Equipment. 

2.It is an expenditure which results in the acquisition of non-current asset or improvement in their earning capacity.

What is Books of Prime entry

Books of Prime entry

*Books of Prime entry are the books in which we first record transactions.

*These are not accounts; they are simply books that records the details of a transactions, almost like a diary. 

*The firm will have a separate book for each kind of transaction. The type of the transaction will affect which book it, is entered into.

What is debit note &credit note

*Debit note


*When the purchaser returns the goods to the seller the Purchaser sends a Debit Note to the seller & the Seller sends a Credit Note to the purchaser.

*A debit note or debit memorandum (memo) is a commercial document issued by a buyer to a seller as a means of formally requesting a credit note

*What are sundry expenses?

* sundry expenses are expenses that are small in amount and do not occur often. Since these items are not significant, a company might use one general ledger account with the title Sundry Expenses for recording the debit amounts.

*If some items recorded in Sundry Expenses begin to occur frequently and/or become significant, the related amounts should be transferred to a new separate general ledger account.

Current & Non-current asset

Asset

*an asset is defined as a "resource controlled by an entity as a result of past event and from which future economic benefits are expected to flow to the entity"

*An asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.

What is sales tax

Sales tax

* A sales tax  is added to the price of goods and services taken by customer

*A sales tax is a consumption tax  imposed by the government on the sale of goods and services.

* A conventional sales tax is levied at the point of sale, collected by the retailer and passed on to the government.

What is discount allow & discount receive

*Discount Allowed

*There is discount allowed when the seller of goods or services gives a discount to the buyer upon payment. 

*Sellers commonly give price reductions as incentives to encourage early payment on credit sales.

*Sellers also allow discounts for other reasons, such as cash up-front payments, volume orders, promotional offers, clearance sales and as a loyalty reward. 

what is discount

*Discount

*An amount or rate by which the catalog, list, or retail price of an item 

is reduced when sold to a re-seller.

*A discount specifically refers to terms which is used when goods are sold at a less than its nominal or par value.

Concept of Double Entry

Double Entry

*Every transaction has two effects. For example, if someone transacts a purchase of a drink from a local store, he pays cash to the shopkeeper and in return, he gets a bottle of dink.

*Double entry is the fundamental concept underlying present-day bookkeeping and accounting. 

What is a Liability

*Liability


1.A liability is a company's legal debt or obligation that arises during the course of business operations. 

2.Liabilities are settled over time through the transfer of economic benefits including money, goods or services.

what is expense

*Expense

1.the amount of money that is needed to pay for buying something

2.the amount of money that must be spent especially regularly to pay for something

3.An expense consists of the economic costs that a business incurs through its operations to earn revenue.

what is inventory

*Inventory

Inventories are assets:

(a) Which is held for sale in the ordinary course of business;

(b) Which would result in the process of production for such sale; or

(c) in the form of materials or supplies to be consumed in the production process or in the rendering of services. (IAS2)

BASIC CONCEPT