WAEC Past Questions and Answers - Page 915

Accounting and journal entry for credit sales include 2 accounts, debtor and sales. In case of a journal entry for cash sales, cash account and sales account are used. The person who owes the money is called a “debtor” and the amount owed is a current asset for the company. Since the goods were sold on credit, debtor acount will be debited (increase in the amount of money being owed to the business), and sales account will be credited.

When merchandise purchased for cash are returned to supplier, we need to record two journal entries. In first entry we debit accounts receivable account and credit purchases returns and allowances account (returns outwards would ve credited because goods are going out of the business). This entry is made to recognize the return of merchandise.

Debit the appropriate asset account in a journal entry in your records by the cost of the asset. Credit the cash account in the same journal entry by the amount of cash you used toward the purchase. If you paid all cash, this amount is the same as the asset's cost.

Purchases account. The purchases account is a general ledger account in which is recorded the inventory purchases of a business. This account is used to calculate the amount of inventory available for sale in a periodic inventory system.

Purchase journal is used for recording goods bought on credit

Your net income or net loss equals your total revenues minus your total expenses for an accounting period. If your revenues are greater than expenses, you have net income. If revenues are less than expenses, you have a net loss. example

Net profit or loss = Revenue - total expenses