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Giving examples, explain the following accounting terms: Fixed assets, Revenue, Expenses, Short-term liability, Capital.

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Solution:-

  1. FIXED ASSETS :- Fixed assets refer to those assets which bare held for continued use in the business for the purpose of producing goods or services and are not meant for sale. Examples of fixed assets are long-term investments, Land& Building, Plant and Machinery, Computer, Motor Vehicles, Furniture etc.

  2.  REVENUE:- Revenue is the money generated from normal business operations, calculated as the average sales price times the number of units sold. It is the top line (or gross income) figure from which costs are subtracted to determine net income.

  3. SHORT- TERM LIABILITIES:– Short-term liability is a financial obligation that is to be paid within one year. This type of liability is classified within the current liabilities section of an entity’s balance sheet. Examples of short-term liabilities are as follows:

•Trade accounts payable

•Accrued expenses

  1. CAPITAL:- It refers to the amount invested by the proprietor in a business enterprise. It is the amount with the help of which goods and assets are purchased in the business. As such in order to calculate the amount of capital all current assets and fixed assets are added up and external liabilities are deducted out of it.

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