Goods are denoted as ‘Purchases A/c’ when goods are purchased and ‘Sales A/c’ when they are sold. If goods are returned to a supplier, or if an invoice received from the supplier has an overcharge, a credit note would be sought to rectify the situation. Purchase return isn’t exactly a gain or an income for […]
During the early years of a loan, the interest portion of this payment will be quite large. Later, as the principal balance is gradually paid down, the interest portion of the payment will decline, while the principal portion increases. This means that the principal portion of the payment will gradually increase over the term of […]
Another common sales discount is “2% 10/Net 30” terms, which allows a 2% discount for paying within 10 days of the invoice date, or paying in 30 days. The terms 2/10, n/30 mean the customer may take a two percent discount on the outstanding balance (original invoice amount less any returns and allowances) if payment […]
Below you will learn how to account for customer deposits, whether you are making or receiving a deposit for an order. On the other hand, the credit entry will differ based on the source of the cash deposit. In most cases, these will include the cash in hand balance. A cash deposit refers to a […]
When merchandise are purchased on account, the purchases account and accounts payable account are involved. When the electric bicycle company purchased bicycle tires from a vendor on November 10th, 2021, the company debited the purchases account for $5,000 and credited the accounts payable account for $5,000. To run successful operations a …
The accounts involved in this example are Asset, Liability, and Expenses. So, the applicable accounting rules are Real Account for Liability & Asset, and Nominal Account for Expense. Let’s learn how to record journal entries first by following the below steps. Thus, the landlord and Mr. Max entered into an agreement that Mr. Max will …