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Expense: An expense is amount paid by the business. It is the cost of running business
or cost incurred for generating income. Expenses can be cash and non-cash. Salary,
rent, wages, electricity charge, stationery, etc. are cash expenses where as depreciation,
and goodwill written off, etc. are non-cash expenses.

Write‐off: It is the total reduction in the value of an asset, recognizing that it no longer
has any value. Write-downs and write-offs are non-cash expenses that affect profits.

Profit and Loss: Profit is the excess of income over expenses and loss is excess of
expenses over income. Profit increases the capital and loss decreases the capital.

Debit: It is an accounting entry where there is either an increase in assets or a decrease
in liabilities on a company's balance sheet. Debit is the entry made on the left side of
an account. It denotes receiving aspect.

Credit: An accounting entry that may either decrease assets or increase liabilities and
equity on the company's balance sheet, depending on the transaction. When using
the double-entry accounting method there will be two recorded entries for every
transaction: a credit and a debit. A credit is the entry made on the right side of an
account. It denotes giving aspect.

Audit: Audit is a careful review of financial records to verify their accuracy. It is the
act of reviewing and verifying the accuracy of financial records as well as validating
methods used to calculate financial records.

Goods: Commodities bought for the purpose of resale are termed as goods. That is
the thing or service which a businessman sells.

Drawings: Drawings are the withdrawals of money or assets by the proprietor from
the business for personal use.

Goodwill: Goodwill is an intangible asset representing such things as reputation,
customer loyalty, location, and other items that give a business a competitive
advantage. Goodwill is usually recognized only when a business is sold, and is the
difference between the amount paid for a business and its net worth. So, goodwill is
an overpayment.

Debtor: The parties and the persons to whom goods are sold and services are rendered
on credit and amount to be received. Debtor is treated as asset.

Creditor: The parties and the persons from whom goods are purchased and services
received on credit and amount to be paid. Creditor is treated as liabilities.

Stock: The goods remaining in the business firm at a particular time is known as stock.

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