Chapter 3: Factors That Impact Business Activities

Question 1

What is the another term for sales day book?

Answer 1

Ans: Sales Journal.

Question 2

What is the another term for Purchase day book?

Answer 2

Ans: Purchases Journal.

Question 3

What is the double entry for Purchase goods on credit?

Answer 3

Dr: Purchases

Cr: Creditor

Question 4

What is the double enter for Return back to creditor/supplier?

Answer 4

Dr: Creditor

Cr: Return Outwards

Question 5

What is the double entry for Sale goods on credits?

Answer 5

Dr: Debtor

Cr: Sales

Question 6

What is the double entery for Returned to us by customer/debtor?

Answer 6

Dr: Return inwards

Cr: Debtor

Question 7

2011
Jan 7 Purchased goods on credit from Gan $27,000 less 10% trade discount.

Calculate the net amount. Show working.

Answer 7

Trade discount = 10%
Actual $/amount = $27,000
Net: $27,000 * 90%
= $24,300.

Question 8

Cash Book
2011
Jan 7 - Purchased goods on credit from Gan $27,000 less 10% trade discount.
Jan 17 - Paid Gan by cheque and was allowed 5% trade discount.

Answer 8

Net Amount: $24,300.
$24,300*5%= $23,085 (Cr side: Bank)
$24,300-$23,085=$1,217 (Discount Received ($))

Question 9

How to open Sales/Purchases Day Book?

Answer 9

Only credit.
First: Heading & Record.
Heading: Title, top. Date(yy). Particulars. Amount($).
Record: Record to journal book.

Second:
Total up; top ul and btm db ul.
End of month date. Transfer to Sales Account/Purchases Account.
Total up amount: Post to the General Ledger (post account).

Third: At post account. Total Credit Sales/Purchases for the Month.

Question 10

Speaking to customers.

Debtor

Return Inwards

Answer 10

Debtor(Customers) - Those who owe the business (credit sales)

Return Inwards - Goods return by customers.

Question 11

Speaking to Suppliers

Creditor

Return Outwards

Answer 11

Creditor(Suppliers)- Those to whom the business owes. (Credit purchases)

Return Outwards-Goods returned to suppliers.

Question 12

RETURNS

To customers

Answer 12

To Customers(Debtor)

Credit note issued -> Return inwards
(Debit nature) Left side!

Question 13

RETURNS

From Suppliers(Creditor)

Answer 13

From suppliers(Creditor)

Credit note received -> Return Outwards
Credit nature

Question 14

Double entry for credit transactions

A. SOLD GOODS TO CUSTOMER ON CREDIT/ISSUED INVOICE TO CUSTOMER

Answer 14

Dr:Debtor a/c (open separate account for each debtor)

Cr:Sales a/c (Goods out)

Question 15

DOUBLE ENTRY FOR CREDIT TRANSACTIONS

B.
RETURNS FROM CUSTOMER/
ISSUED CREDIT NOTE TO CUSTOMER

Answer 15

Dr:Return Inwards a/c (goods in)
Cr:Debtors a/c

Question 16

DOUBLE ENTRY FOR CREDIT TRANSACTIONS

C. PURCHASED GOODS FROM SUPPLIER ON CREDIT/RECEIVED INVOICE FROM SUPPLIER.

Answer 16

Dr:Purchases a/c (Goods in)
Cr:Creditor a/c (open separate a/c for each creditor)

Question 17

DOUBLE ENTRY FOR CREDIT TRANSACTINONS

D. RETURNS GOODS TO SUPPLIER/RECEIVED CREDIT NOTE FROM SUPPLIER.

Answer 17

Dr:Creditors a/c

Cr:Returns Outwards a/c (goods out)