Capital income:
An income which does not grow out of or pertain to the running of the business proper.

Revenue income:
The income which arises out of and in the course of the regular business transactions of a concern.

Capital expenditure:
Means an expenditure which has been incurred for the purpose of obtaining a long term advantage for the business.

Revenue expenditure:
An expenditure that incurred in the course of regular business transactions of a concern.

Differed revenue expenditure:
An expenditure, which is incurred during an accounting period but is applicable further periods also. Eg: heavy advertisement.

Bad debts:
The amount which is consid ered as irrecoverable from debtors to whom the goods were sold on credit.



Depreciation:
Means gradually and permanent decrease in the value of asset due to wear and tear, technology changes, laps of time and accident.

Fictitious assets:
These are assets not represented by tangible possession or property.
Examples of preliminary expenses, discount on issue of shares, debit balance in the profit and loss account when shown on the assets side in the balance sheet.

Intanglbe Assets:
The assets which is not having the physical appearance. And it has the real value, it shown on the assets side of the balance sheet.

Accrued Income :
An income which has been earned by the business during the accounting year but which has not yet been due and, therefore, has not been received.

Out standing Income :
An income which has become due during the accounting year but which has not so far been received by the firm.

Suspense account:
An account to which the difference in the trial balance has been put temporarily.

Depletion:
It implies removal of an available but not replaceable source, Such as extracting coal from a coal mine.

Amortization:
The process of writing of intangible assets is term as amortization.

Capital employed:
The term capital employed means sum of total long term funds employed in the business. i.e. (share capital+ reserves & surplus +long term loans – (non business assets + fictitious assets).

Equity shares:
Those shares which are not having pref. rights are called equity shares.

Preference shares:
Those shares which are carrying the pref.rights is called pref. shares
Pref.rights in respect of fixed dividend. Pref.right to repayment of capital in the event of
company winding up.

Joint venture:
A joint venture is an association of two or more persons who combined for the execution of a specific transaction and divide the profit or loss in an agreed ratio.

Partnership:
It is the relation b/w the persons who have agreed to share the profits of business carried on by all or any of them acting for all.

Factoring:
It is an arrangement under which a firm (called borrower) receives advances against its                 receivables, from a financial institutions (called factor)

Funds flow statement:
It is the statement deals with the financial resources for running business activities. It explains how the funds obtained and how they used.

Sources of funds:
There are two sources of funds Internal sources and external sources.

Internal source:
Funds from operations is the only internal sources of funds and some important points add to it they do not result in the outflow of funds

(a) Depreciation on fixed assets
(b) Preliminary expenses or goodwill written off, Loss on sale of fixed assets

Deduct the following items, as they do not increase the funds:
Profit on sale of fixed assets, profit on revaluation of fixed assets

External sources:
(a) Funds from long-term loans
(b)Sale of fixed assets
(c) Funds from increase in share capital

Application of funds:
(a) Purchase of fixed assets (b) Payment of dividend (c)Payment of tax liability (d) Payment of fixed liability

ICD (Inter corporate deposits):
Companies can borrow funds for a short period. For example 6 months or less from another company which have surplus liquidity. Such eposits made by one company in another company are called ICD.

Certificate of deposits:
The CD is a document of title similar to a fixed deposit receipt issued by banks there is no prescribed interest rate on such CDs it is based on the prevailing market conditions.

Public deposits:
It is very important source of short term and medium term finance. The company can accept PD from members of the public and shareholders. It has the maturity period of 6 months to 3 years.

Euro issues:
The euro issues means that the issue is listed on a European stock Exchange. The subscription can come from any part of the world except India.

GDR (Global depository receipts):
A depository receipt is basically a negotiable certificate , dominated in us dollars that represents a non-US company publicly traded in local currency equity shares.

ADR (American depository receipts):
Depository receipt issued by a company in the USA are known as ADRs. Such receipts are to be issued in accordance with the provisions stipulated by the securities Exchange commission (SEC) of USA like SEBI in India.

Commercial banks:
Commercial banks extend foreign currency loans for international operations, just like rupee loans. The banks also provided overdraft.

Development banks:
It offers long-term and medium term loans including foreign currency loans

International agencies:
International agencies like the IFC,IBRD,ADB,IMF etc. provide indirect assistance for obtaining foreign currency.

Seed capital assistance:
The seed capital assistance scheme is desired by the IDBI for professionally or technically qualified entrepreneurs and persons possessing relevant experience and skills and entrepreneur traits.

Unsecured loans:
It constitutes a significant part of long-term finance available to an enterprise.

Cash flow statement:
It is a statement depicting change in cash position from one period to another.

Sources of cash: Internal sources-
(a)Depreciation
(b)Amortization
(c)Loss on sale of fixed assets
(d)Gains from sale of fixed assets
(e) Creation of reserves External sources-

(a)Issue of new shares
(b)Raising long term loans
(c)Short-term borrowings
(d)Sale of fixed assets, investments

Application of cash:
(a) Purchase of fixed assets
(b) Payment of long-term loans
(c) Decrease in deferred payment liabilities
(d) Payment of tax, dividend
(e) Decrease in unsecured loans and deposits

Budget:
It is a detailed plan of operations for some specific future period. It is an estimate prepared in advance of the period to which it applies.

Budgetary control:
It is the system of management control and accounting in which all operations are forecasted and so for as possible planned ahead, and the actual results compared with the forecasted and planned ones.

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