DEBIT CUSTOMER
CREDIT SALES

what is accounting equation

difference between assets and liabilities
assets are what are owned and owed by and to a business.

liabilities are what are owed by a business

Ans. A trial balance is the list of all balances in a ledger account and is used to check the arithmetical accuracy in
recording and posting. A balance sheet, on the other hand, is a statement which shows the assets, liabilities and
equity of a company and is used to ascertain its financial position on a particular date.

What is business entity?
In accounting, a business or an organization and its owners are treated as two separately identifiable parties. This is called the entity concept. The business stands apart from other organizations as a separate economic unit.

debit NCA
credit bank

It is the term introduced in the records for every defective or unsatisfactory good
returned back to its supplier.

discount received is what is given to us by supplier.

DA is allowed by us to customer

Sales-Selling of goods and services to customers
Purchases-Acquire goods and services

A going concern is a business that is assumed will meet its financial obligations when they fall due. It functions without the threat of liquidation for the foreseeable future, which is usually regarded as at least the next 12 months or the specified accounting period.

debit purchases
credit bank

In accounting, the trial balance is an accounting report that lists the
balances in each of an organization's general ledger accounts. This is done

at the end of the posting journal entry to ensure that there are no posting
errors.

Trades Payable
The amount a company owes because it purchased
goods or services on credit from a vendor or supplier.
TR

The amount a company has right to collect because it
sold goods or services on credit to a customer.

Accounts payable are liabilities. Accounts receivable are assets.

As the name implies, the dual aspect concept states that every transaction has two sides. For example, when you
buy something, you give the cash and get the thing. Similarly, when you sell something, you lose the thing and gets
the money. So this getting and losing are basically two aspects of every transaction.

The realization principle is the concept that revenue can only be recognized once the underlying goods or services associated with the revenue have been delivered or rendered, respectively. Thus, revenue can only be recognized after it has been earned.

debit bank
credit cash

A Bad debt expense is the amount of an account receivable that is considered to
NOT be collectible.

revenue expenditure are the day to day transactions
capital expenditure are the purchasing of NCA.

The disadvantage of double entry system,
 If there are any compensatory errors, it is difficult to find out by this system
 This system needs more clerical labor.
 It is difficult to find the errors if the errors are in the transactions recorded in
the books
 It is not preferable to disclose all the information of a transaction, which is
not properly recorded in the journal

Money Measurement Concept in accounting, also known as Measurability Concept, means that only transactions and events that are capable of being measured in monetary terms are recognized in the financial statements.

debit bank
credit partners capital a/c

 Working capital is calculated as current assets minus current liabilities, which is used in day-to-day trading.

trade discount not recorded. for buying goods on bulk

cash discount recorded. for prompt payment

Some asset accounts have a credit balance due to the following reasons,
 Receiving and posting an amount that was higher than the recorded
receivable
 Expenses occurred faster than the agreed upon prepayments
 An error caused by posting an amount to a wrong account
 The amount of checks written exceeded the positive amount in the Cash
account
 Continuing to amortize or depreciate an asset after its balance has reached
zero

The prudence concept, also known as the conservatism principle, is an accounting principle that requires an accountant to record liabilities and expenses as soon as they occur, but revenues only when they are assured or realized