Accounting Terminology_ Dr. SAAM Assets: All the resources under the custody of a business have future benefits.

For instance, X Ltd. has a building worth tk. 24million is treated as an asset for the company because of its future benefit. Owners Equity /Shareholders Equity/ Equity (OE): any obligation of the firm to Owners or shareholders is called OE. In another word, claim of owners on their firms assets is called OE. This is the internal claim of the firm because owners are the internal parties. For example, any owner has invested tk. 3000 in his new business on 1 January, 2012, on that day, his claim on the business is tk. 3000. Liabilities: any obligation of a firm to any other stakeholders or parties except owners is called liability. This is the external claim of the firm. Revenue or turnover: When a firm earns income from its core business operation it is treated as revenue or turnover. A firm generally earns revenue from sales of goods or providing of services. For example, a furniture manufacturer produces and sells future for tk. 200,000 in 2012, this amount is treated as the revenue of the company for the period. Expenses: If a firm used any assets or efforts of its employees to generate its revenue, it is treated as expense. For example, if the salary of the employees of Y Ltd. is tk. 30,000 for year 2012, it is treated as the expense of the firm for the period. Remember! it is the expense of the period whether it is paid or not in 2012. Because the company has used the effort of employees, equivalent to tk. 30,000, for generating its revenue in 2012. Profit and Loss: Profit means excess revenue over expense. When total revenue is higher than total expense of the firm for a particular period, the excess amount is treated as the profit for the period. Whereas, if expense is lower than revenue, it is treated as loss for the period. For example, Y Ltd. has total revenue tk. 25,000 and total expense tk. 18,000 in 2012, the companys profit tk. 7000 (25,000 >18000) for the period, while if the expense would be tk. 29,000, the company would have loss tk. 4000 (25000<29000). Drawings/Dividend: If owners withdraw any part of its claim is termed as drawing. When a company distributes its part of profit among shareholders is called dividend. If the owners of Y Ltd. withdraw tk. 5000 out its total profit tk. 7000, the tk. 5000 is called drawing or dividend of the company. Retained Earnings: The part of the profit is not distributed among shareholders, is called retained earnings. Y Ltd. has not distributed tk. 2000 out of total profit tk. 7000, therefore, tk. 2000 is called retained earnings. Capital Gain and loss: if a firm sells its any asset, which was not purchased for reselling purpose, more than its unconsumed cost, the excess selling price over the cost is called capital gain. Whereas if the selling price is lower than the consumed cost, it creates capital loss. For example, AB Bank Ltd has a car with unconsumed cost tk. 1.5 million which is sold for tk. 1.8 million, the capital gain of the company is tk. 0.3 million. On the other hand if the selling price would be tk. 1.1 million, the capital loss would be0.4 million.