Chart of Accounts

Chart of Accounts is grouped into five main categories:
1. Assets
2. Liabilities
3. Capital
4. Expenses
5. Revenues

Assets:
Assets are the recources of business, which a business utilizes to get future economic benefits. Assets are sub-grouped into two categories:
1. Current Assets
2. Fixed Assets

Current Assets:
Current Assets are recources, which a business usually utilizes with a year. Some of the current assets are: Cash in hand, Cash at bank, Bills Receivable, Notes Receivable, Inventory etc.

Fixed Assets:
Fixed Assets are recources of business, having a life more than one year. The assets purchased for resale are not included in Fixed Assets. Some of the fixed assets are: Land, Building, Machinery, Furniture etc.

Liabilities:
Liabilities are the Debts. Some of the examples of Liabilities are:
* Accounts payable- the parties from which goods are purchased on credit.
* Loan from Bank- usually provided by Commercial Banks.

Capital:
Capital is the amount which owner provides for operating business activities. Capital is increased when recources of business are increased when Owner additionally invests cash or other asset and the business earn profit.

Expenses:
Cost intended to benefit the near future like, Salaries, Rent, Bank charges etc.

Revenues:
The term Revenue stands for sale of product, service and merchandise or earnings from interest, dividends, rent etc, or gains from sale or exchange of assets. Some of the revenues are sales, rent income, commission income etc.

What is Accounting?

Accounting is the process, applied in a business which comprises recording the data, classifying and summarizing the data, presenting the results to the owner(s) of business.

During business, events like receiving cash from customers, payments to supplies, purchasing goods for sale out, sale of goods, salaries, wages and so on take place. These events as mentioned are generally called transactions. Every transaction concerned with receipt and payment of cash or otherwise, must be recorded in the books. The books in which such transactions are recorded are General Journal and Subsidiary Books like Cash book, Sales Journal, Purchase Journal etc.

The Transactions, which are recorded in General journal and Subsidiary books are then sorted and arranged for analyzing. Moreover, these individual accounts are balanced-off and list of these balances is prepared which is termed as Trial Balance. These records are kept for the purpose of calculating profit or loss. Likewise, they want to know how much the share of recources is owned in the business. Financial statements like Trading and Profit & Loss account and balance sheet are prepared for achieving these objectives.

After preparing financial statements, the finance/accounts managers clarify the business position to the owners. They convey to them the strong and weak points of the business.

Micro-Economics

Micro-economics is that part of economic analysis which studies decisions of individuals and firms in economy. Microeconomics is the study of specific individual units, particular firms, particular households, individual prices, wages, income, individual industries, particular commodities etc.

In the words of Samuelson:
"In microeconomics we examine among other things how individual prices are set, consider what determines the prices of land and capital and enquire into the strength and weakness of market mechanism."

Microeconomics explains how consumers and producers take their decisions regarding allocation of productive recourses among various goods and services.

Banking

It is very difficult to correctly define a bank, because a bank performs multifarious functions. Different kinds of banks having different functions may be defined in different ways according to their functions. A general and comprehensive definition to cover all types of banking institutions would be unscientific and probably impossible.

Now, Have a look at that some popular definitions of Banking:
According to Keynes:
"A bank is an institute which receives deposits and advances loans."

According to Kinley:
"An establishment which makes to individuals such advances of money or other means of payments as may be required and safely made and to which individuals entrust money or the means of payments when not required for use by them."

Welcome

Welcome to my blog. I'm a student of commerce since almost three years. Commerce has a wide range and an interesting subject. When I was thinking about writing on blog, I decided to write only about my subject, Commerce. So, that's why this is a Commerce House. You'll read here many thing but just about commerce. I hope that this will be useful for all students and those guys who are interested in it.

regards,