Chapter 2 - Credit Sales And Purchases Flashcards
What Book of prime entry is a credit purchase usually recorded in ?
Purchases day book
What Book of prime entry is a credit sale usually recorded in ?
Sales day book
What is a Credit purchase ?
A credit purchase is where goods are bought from a supplier but payment is to be made at a later date (usually 30 days but can vary)
What is a Credit sale ?
A Credit sale is where goods are sold to a customer but payment is to be received at a later date (usually 30 days but can vary)
When a business makes a Credit purchase the two accounts involved in double entry book-keeping would be the purchases account and the trade payables (Supplier) account.
Which account will be debited and which will be credited ?
Purchases account - Debit
Trade payable (Supplier) account - Credit
When payment is made to a trade payable (Supplier) the two accounts involved in double entry book-keeping would be the trade payables (Supplier) account and the bank or cash account.
Which account will be debited and which will be credited ?
Trade payable (Supplier) account - Debit
Bank or cash account - Credit
When a business makes a Credit sale the two accounts involved in double entry book-keeping would be the sales account and the trade receivables (Customer) account.
Which account will be debited and which account will be credited ?
Trade receivables (Customer) account - Debit
Sales account - Credit
When payment is received from a trade receivable (Customer) the two accounts involved in double entry book-keeping would be the trade receivable (Customer) account and the bank or cash account.
Which account will be debited and which will be credited ?
Bank or cash account - Debit
Trade receivable (Customer) account - Credit
What Book of prime entry would be used to record the purchase of a Non-Current Asset ?
The journal
When a business makes a ** Credit purchase** of a Non-Current Asset the two accounts involved in double entry bookkeeping would be the Non-Current Assets account and the trade payables (Supplier) account.
Which account will be debited and which will be credited ?
Non-Current Assets account - Debit
Trade payables (Supplier) account - Credit
What is meant by purchase returns or returns out ?
This is where a business returns goods to a supplier
If a business makes a purchase return the two accounts involved in double entry bookkeeping would be the trade payables (Supplier) account and the purchases returns (or returns outward) account
Which account will be debited and which will be credited ?
Trade payables (Supplier) account - Debit
Purchases returns (or returns outward) account - Credit
What is meant by sales returns or returns in ?
This is where a customer returns goods to the business
If a business makes a sales return the two accounts involved in double entry bookkeeping would be the trade receivable (Customer) account and the sales returns (or returns in) account
Which account will be debited and which will be credited ?
Sales returns (or returns in) account - Debit
Trade receivable (Customer) account - Credit
What Book of prime entry is a purchase return usually recorded in ?
Purchase return day book
