Page 20 - ISCDEBK-XI

Basic Accounting Terms 2.7
8. Account. A summarised record of similar transactions.
Account is a summarised record of relevant transactions at one place relating to a particular
head. It records not only the amount of transactions but also their effect and direction. For
example, a Cash Account will show all cash received and paid. A Fixed Asset Account will
show purchases, sales and depreciation of fixed assets.
9. Books of Account. Books in which transactions are entered.
Books of Account means a system of records, which records and explains the financial
transactions of a business. When we refer to books of account, it means Journal and Ledger
in which transactions are recorded.

10. Entry.
A transaction and event when recorded in the books of account is known as an Entry.
11. Debit.
An account has two parts, i.e., debit and credit. The left side is the debit side while the
right side is the credit side. If an account is to be debited, then the entry is posted to the
debit side of the account. In such an event, it is said that the account is debited. The term
‘Debit’ is derived from an Italian word ‘Debito’.
12. Credit.
Credit is the right side of an account. If an account is to be credited, then the entry is posted
to the credit side of the account. In such an event, it is said that the account is credited.
The term ‘Credit’ is derived from an Italian word ‘Credito’.

13. Proprietor. A person owning business and investing therein.
The person who owns and makes investment and bears all the risks connected with the
business is called the Proprietor.

14. Receivables. Amounts owed to the firm.
‘Receivables’ means amount due from others against sale of goods and/or services. It
includes debtors, bills receivables, advances, etc.
15. Payables. Amounts owed by the firm.
‘Payables’ means amount payable by the enterprise to others and includes amount payable
to creditors, lenders, employees or government towards taxes, etc.

16. Bill of Exchange. An unconditional order in writing.
A Bill of Exchange is an unconditional order in writing given by the creditor to the debtor
and accepted by him (debtor) to pay on demand or after a certain period, a certain sum
of money to or to the order of a specified person or to the bearer.

17. Bill Receivable.
Bill Receivable means a bill of exchange accepted by a debtor, the amount of which will
be received on the specified date.