Page 110 - Office Practice and Accounting -9

It is the property held for sale in the ordinary course of business or for consumption
in the production of goods or services for sale. Stock is of two types- opening stock
and closing stock. There may be opening and closing stock of raw materials, semi-
finished goods and finished goods.

Sales: Sales is the amount received or due for goods or services sold to customers.
Gross sales are total sales before any returns or adjustments. Net sales are after
accounting for returns and adjustments.

Fiscal/ financial year: A fiscal year is a period of twelve continuous months chosen
by an entity for its accounting period. In the Nepali context, it begins from 1st of
Shrawan and ends at the end of Asar.

Depreciation: Depreciation is the permanent and gradual decrease in the value of fixed
assets from any cause. These causes of depreciation may be accident, obsolescence,
wear and tear, technology, fall in market price, etc. So it is charged on the value of
fixed assets recorded on debit side of profit and loss account.
Bad debt: Bad debt is the definite loss arising from credit sales. It is the amount not
paid by the debtors due to their dishonesty and insolvency. It is loss and debited to
the profit and loss account.

Discount: Discount is a kind of rebate or facility offered by a seller to the buyer on
goods sold or offered by the creditor to the debtors while making payment. Discount
is of two types:

i. Cash discount: Cash discount is given by a trader to another trader on payment
being made within certain period. It is recorded in the books of account and the
entry is passed. It is not deducted while preparing the invoice.

ii. Trade discount: Trade discount is allowance made by one trader to another trader
or customer. It is generally allowed by a wholesaler to retailer at a fixed percentage
on the catalogue price. It is not recorded in general journal book, and the entry is
made with the net amount. It is deducted in the invoice.

Dividend: It is a portion of the after-tax profits paid out to the owners of a business
as a return on their investment.

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