In simple way, we will understand what account is! Account is nothing more, it is a language of business. Business made in two terms- first term is expenses and second term is income. So we define the term business as a human activity under which goods are dealt in for profit making. There are also two types of business:
- 1) profit making— any business is done with a view to profit making.business means busy ,
- 2) non profit making— it is to be treated as not for profit organisation. It stands for NPO i.e. not for profit organisation is that business which is not done with a view to earning profit, its objectives have to provide services to society. We see for example — school, college etc.
By the way, we will know about the language of business in details – see the examples for identifing the language of business-
- 1. started business with captial rs 10000
- 2.purchased goods from mohan rs 150
- 3. sold goods to mohan rs2000.
- 4.sold goods to mohan for cash 1000
- 5. diposited in to bank rs 10000 .
- 6 returns goods to mohan rs 1oooo
- 7. returns goods from mohan rs 3000.
- 8. salaries paid rs 2000 to mohan
- 9. commission received.
- 10. outstanding salaries.
It is to be treated as transactions in business. Now we will know about features of business which are as follows:
- 1. profit making
- 2. business will not be done without risks
- 3. profits and losses are borne by proprietor in a business.
- 4. joint family hindus business is done by karta, karta is the head of family when karta is dead by accident than his son enjoys rights in a business
- 5) secrecy is the key to success a business.
- 6 )license is must in a business.
- 7) self confidence
- 8)performance of performance in a market .
- 9) competition of market
- 10) unlimited liabilities(sole proprietor has unlimited liabilities,partners have unlimited liabilities