What is Capital - Meaning and Example.

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In this article, we will know What is Capital - Meaning and Example.

Meaning of capital.

The amount brought in cash by proprietor for running. Business is written as capital.

Example: It is 20 lakh.

Liabilities

The amount which is due for payment.

Liabilities

Loan liabilities --- Current liabilities

Loan liabilities: Two types of liabilities.

Loan liabilities:

1. Loan liabilities occurs when loan is taken from.
2. Any Bank.
3. Any financial institution or.
4. Any person.

Current liabilities

It includes liability other. Than loan liabilities, Time period of which does not exceed one year.

Example: Sundry creditors, Bills payables, Provision etc.

Assets

Assets: Assets can be defined in the following points.

1. It's should be utilized in business.
2. Assets should have market value.
3. Ownership must be there.

Assets.	Fixed assets.
	Current assets.

Fixed an current assets.

Fixed assets: Assets which are used in business for long period of time.

Example: Plant & machinery, building, farniture etc.

Expenses on incomes.

Expenses: it includes the expenses which is incurred in the business.

Example: telephone expenses, electricity bill, office expenses, mics expenses.

Incomes: receipt which we receive in form of cash.

Example: interest received, commission received, rent received.

Accounting concepts

1. Separate entity concepts: Business has it's own separate legal entity from that of it's members.
2. Duel effects:A single transaction effects two different accounts.

Example: 1. Furniture purchased in cash so_______

Furniture = assets = increase

Cash = assets = decrease

Example: 2. Furniture purchased in credit from pushpa furniture Mart.

Furniture= assets= increase.

Pushpa furniture Mart= liabilities= increase.

Example: 3. cash paid to Pushpa furniture Mart.

Pushpa furniture Mart = liabilities = decrease.

Cash = assets = decrease.

3. Period: Daily, weekly, Monthly, Quarterly, half yearly, Yearly
4. Only financial transaction: Accounting cannot be done on the basic of promise.Each transaction has financial impact.

Typing of organisation.

• Service organisation.
• Trading organization.
• Manufacturing organisation.

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