Page 21 - ISCDEBK-XI

2.8 Double Entry Book Keeping—ISC XI
18. Bill Payable.
Bill Payable means a bill of exchange, the amount of which will be payable on the
specified date.

19. Depreciation. Decrease in book value of assets due to its wear and tear.
Depreciation is decrease in the value of an asset because of usage or with passage of time
or obsolescence or accident.
20. Cost of Goods Sold. Cost of goods attributable to goods sold.
Cost of Goods Sold is the direct cost of the goods and/or services sold.

21. Bad Debts. Amount not recoverable.
Bad Debt is the amount that has become irrecoverable. It is a business loss and is debited
to Profit & Loss Account.
22. Insolvent. A person or entity unable to pay his/its debts.
Insolvent is a person or entity whose assets are not adequate to pay its debts.

23. Solvent. A person or entity in position to pay his/its liabilities.
Solvent is a person or enterprise whose assets are sufficient to pay its debts.

24. Book Value. Value of an asset in the books of account.
It is the amount at which an item exists in the books of account.
25. Investments. Asset purchased or amount placed in bank to earn income.
Investment means placement of funds with the expectation to earn return. Commonly, it
refers to shares and debentures, mutual funds, bonds issued by the financial institutions
and by the government. Investments are not expected to be sold within a year.
26. Balance Sheet. A statement showing assets, liabilities and capital.

It is a statement of the financial position at a given date, which shows its assets, liabilities,
capital, reserves and other account balances at their book values.

27. Entity. An economic entity.
An entity means an economic unit that performs economic activities (e.g., Bajaj Auto,
Maruti, TISCO). An entity may be a business entity or non-business entity. Business entity
means a specifically identifiable business enterprise like ITC Ltd.