What is a Budget?
Budget is a plan of income, expenses & other financial operation for a future period.
Concept of Costing
A person making or producing any thing must not only know how much it costs to make but also to help in determining the selling price.It is necessary that the person not only knows the cost of what is being produced but also the cost of each component which has gone into production.All this is only possible if the costs and data relating to production is properly recorded and analysed, an exercise that the Accountant only can carry out.
Money Measurement Concept.
With the passage of time, the trading volumes and types of commodities available in the market increased and it became increasingly difficult to exchange commodity with commodity.
- That is why the concept of cash / money came in and people started valuing all goods / services in terms of a common commodity called money. Now the price of 10 kg wheat would be Rupees 60 and not 2 meters of cloth. In accounting, every transaction that is worth recording is recorded in terms of money. In other words any event or item that cannot be translated in terms of money is not recorded in books.
Cash and Credit Transactions.
- Translating every transaction in terms of money does not always mean that the money changes hands, the same time at which the transaction takes place. It may be paid before or after the goods are exchanged.
- When the money value of an item being purchased is paid, at the same time the item is exchanged.The transaction is said to be a cash transaction.
- On the other hand, if the payment is delayed to a future date, the transaction is termed as a credit transaction.
Different Types of Business Organizations:
A business owned and run by a single person
A business owned and run by more than one persons.
- Limited Company
A large organization with separate legal status.