Financial Terminology for Drawing and Disbursing Officers (Part-2)

Financial Terminology for Drawing and
Disbursing Officers and Financial Executives (Part-2)

-Dr. Lalit Kumar Setia*

Income and Expenditure Account

An account of a non-profit-seeking but property owning organization and which corresponds to the profit and loss account of a profit-seeking, trading organization.

Income statement

The equivalent of a profit and loss statement for a particular period of time.  A financial statement showing revenues earned and the expenses incurred in earning and revenues and the resulting net income or net loss.

Indirect Cost

Overhead costs associated with the production of one or more goods and services.

Indirect Labour

The labour of those persons who do not work directly on the manufactured products, and whose labour therefore, cannot be easily associated with specific units of product.

Indirect Material

Commodities that are used in production but that do not enter into and become a part of the finished product e.g. grease and oil for machinery or cleaning fluid.

Interest

Money earned as reward for lending capital to another.  Any share in, or other benefits to be derived from property, business or other undertakings.

Interim Dividend

A provisional distribution made before the actual dividend is due or before the whole of the profits to be dividend is ascertained.

Inventory

A synonym for stock.

Investment

The giving up of present benefits, such as cash, in order to obtain property, assets, securities etc. in the expectation of a future gain or income from these.

Invoice

A document sent by a seller to a buyer specifying full material details of the sale and its price, including, where relevant, value-added tax. 

Issue Price

            The price at which a security is sold by the issuer.

Ledger

The main book or set of books used to record trading transactions and in which debtor-creditor accounts are summarized.

Liability

The economic obligation of the business entity to creditors.  Debts owned by a person or organization or likely to arise from their activities.

Loss

An excess of expenses or costs over revenues.

Approach to check out the depth of accounting:

To understand all the items given above, we have to take all in concise manner. Firstly think about the Assets, Liabilities and Capital. After understanding these three terms, understand Profits and Losses in the organization. After that understand the following term of debit and credit:

Debits and Credits -

These are the backbone of any accounting system. Understand how debits and credits work and you'll understand the whole system. Every accounting entry in the general ledger contains both a debit and a credit. Further, all debits must equal all credits. If they don't, the entry is out of balance. That's not good. Out-of-balance entries throw your balance sheet out of balance.

Therefore, the accounting system must have a mechanism to ensure that all entries balance. Indeed, most automated accounting systems won't let you enter an out-of-balance entry-they'll just beep at you until you fix your error. Depending on what type of account you are dealing with, a debit or credit will either increase or decrease the account balance. (Here comes the hardest part of accounting for most beginners, so pay attention.)
*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.