Account 3 Marks Question

Yes. Sales can be either in cash or on credit. Credit sales are recorded in the Sales Book and cash sales in the Cash Book. The source documents for recording entries in the Sales Book are invoices or bills issued to customers. Entries are recorded with the net amount of the invoice after deducting trade discount.

Journal proper is book of original entry (simple journal) in which miscellaneous credit transactions which do not fit in any other books are recorded. It is also called miscellaneous journal. The form and procedure for maintaining this journal is the same that of simple journal.

1. Credit purchase of plant and Machinery.
2. Credit sales of fixed assets.

A form or letter sent by a seller to a buyer, stating that a certain amount has been credited to the buyer's account.
A credit note is issued in various situations to correct a mistake, such as when:

1. An invoice amount is overstated.
2. Correct discount rate is not applied.
3. Goods spoil within guaranty period.
4. They do not meet the buyer's specifications and are returned. Also called credit memo.

In an enterprise there are number of transactions relating to incomes and expenses, which need to be adjusted so that, final accounts give true and fair view of the results. All such items which need to be adjusted when Final Accounts are prepared are called adjustments. Journal entries are passed giving effect to the adjustments. These entries are known as Adjusting Entries.

Purchases Return Book or Returns Outward Book is a subsidiary book maintained to record the goods or materials returned to the sellers of goods that were purchased on credit.Ruling of a Purchases Return Book is similar to the Purchases Book ruling except that instead of a column for 'Invoice No.' it has a column for Debit Note No.

Sales Return Book or Returns Inward Book is a subsidiary book maintained to record the goods or materials returned by the purchaser that had been sold on credit. This book is maintained if the return of goods is frequent otherwise it can be recorded in the Journal.

Yes. Purchase is an Expense Account therefore, following the rule ‘Increase in expenses is debited and decrease credited.' Purchases Account is debited. Since, the Purchases Book contains records of credit purchases, the Supplier's Account is credited following the rule applicable to Liability Accounts, i.e., 'Increase in liabilities is credited and decrease debited.'

Yes. Sale is a revenue account and, therefore, following the rule 'Increase in revenue is credited and decrease debiteď Sales Account is credited. Since, the Sales Book contains records of credit sales, the Purchaser's Account (being debtors) is debited following the rule applicable to Asset Accounts, i.e., “Increase in assets is debited and decrease credited.

CGST, SGST and IGST all these all collected from different types of transactions.

• CGST: It is collected on intra state supplies made (i.e. within the state).
• SGST: It is collected on intra state supplies made (i.e. within the state).
• IGST: It is collected on inter state supplies made (i.e. outside the state).

So, in order to get a clear presentation of all the adjustments these accounts are maintained separately.

Purchases Books is a subsidiary book in which credit purchases of goods, i.e., goods in which the firm deals or uses for manufacturing goods are recorded. Thus, cash purchases of goods and non-goods like fixed assets are not recorded in Purchases Bock.

Opening Entry: Opening entry is recorded in the beginning of a financial year to open the books by debiting assets and crediting liabilities and the capital appearing in the Balance Sheet of the previous year.

Yes. Purchases can be either in cash or on credit. Credit purchases are recorded in the Purchases Book. The source documents for recording entries in the Purchases Book are invoices or bills received from the suppliers of goods. The entries are made with the net amount of the invoice after deducting trade discount.