Ans.:- The terms of assets, liabilities, Owner’s equity, Revenue, Expense and Drawings are expressed in brief:
Assets:
Goods and wealth measurable in terms of money of a business concern which help in increasing wealth and creation of utility are called assets.
Liabilities:
Liabilities are claims against assets. That is liabilities are existing debts and obligations.
Owner’s Equity:
The ownership claim on total assts is known as owner’s equity. It is equal to total assets minus total liabilities. The assits of a business are supplied or claimed by either creditors or owners. To find out what belongs to owners. We subtract the creditors’ claimb (the liabilities) from assots. The remainder is the owner’s claim on the assets_____ the owner’s equity.
Revenue:
Revenue is the inflow of assets arising out of sale of commodities and services. The influence of revenue or income over accounting equation is started. Generally revenues result from the sale of merchandise, the performance of services, the rental of properly, and the lending of money.
Expense:
Amount spent earning is cabled expense. Expenses are the lost of assets consumed or services used in the process of earning revenue. They are decreases in owner’s equity that result from operation the business. Expenses represent actual or expected cash out flows. Like revenues expenses take many forms and are identified by various names depending on the type of asset consumed or service used.
Drawings:
An owner many withdraw cash or other assets for personal use. Those withdrawals cou’d be recorded as a direct decrease of owner’s equity. How ever it is generally considered preferable to use a separate classification called drawings to determine the total withdrawals for each accounting period. Drawing decrease owner’s equity.
