Seminar 5

Question 1

what must be done to the sales & purchases account at the end of a period?

Answer 1

they must be balanced off and transferred to the trading account

Question 2

if sales has a credit balance at the end of the period, what must be done?

Answer 2

it must be debited by its credit balance and transferred to the trading account

(giving the trading account a credit balance)

this will then be put in the income statement

Question 3

when a purchase is made, what is the journal entry?

Answer 3

debit purchases, credit cash

Question 4

if purchases has a debit balance at the end of the period, what must be done?

Answer 4

it must be credited by its debit balance and transferred to the trading account

(giving the trading account a credit balance)

this will then be put on the income statement

Question 5

what does the trading account calculate?

Answer 5

gross profit