Tag: functions, advantages, objects and importance of journal

 In bookkeeping and accounting, a ledger is a book (or record) for collecting historical transaction data from a journal and organizing entries by account. The ledger provides the transaction history and current balance in each accounting system account, throughout the accounting period.

The customer may return the goods. 

Thus, goods sold that are returned by the customer or buyer, are recorded in the Sales Return Book. 

The Credit Note contains the name of the customer, details of goods returned and reason thereof. Each Credit Note is dated and serially numbered.

When the goods purchased on credit are returned to the supplier, these are recorded in the Purchase return book. Sometimes, goods purchased can be defective or of low quality, etc. and hence, need to be returned. A separate book is maintained for the purchase return and these are not deducted from the purchases in the Purchase book. Also, Purchase return is recorded at the net amount on the invoice.

Profit on sale of furniture account is a nominal account the golden rule regarding which says “ All expenses and losses should be debited and all income and gains should be credited” as we are earning income from selling we have to credit this account.

Cash A/c Dr.

To Sales A/c.

Journalizing is the process of recording a business transaction in the accounting records. This activity only applies to the double-entry bookkeeping system.  

This calls for the identification of the general ledger accounts that will be altered as a result of the transaction.

A supplier when an order is received, this may be due to poor quality, inaccurate quantity, untimely delivery or other reasons. 

Purchase returns are also called returns outward and an appropriate purchase returns/returns outward book is maintained.

All returns are primarily recorded in the purchase returns book unless the returns are not that frequent, in which case they are recorded in the journal.

Accounts Receivable (AR) is the proceeds or payment which the company will receive from its customers who have purchased its goods & services on credit. Usually the credit period is short ranging from few days to months or in some cases maybe a year.

A debit note is a document used by a vendor to inform the buyer of current debt obligations, or a document created by a buyer when returning goods received on credit. The debit note can provide information regarding an upcoming invoice, or may serve as a reminder for funds currently due.