REVISION EXERCISE - 2 (CONTINUED : BASIC ACCOUNTING TERMS) WITH ASSIGNMENT #2



Chapter 2

BASIC  ACCOUNTING  TERMS

LEARNING OUTCOMES:

 CONTINUING FROM THE PREVIOUS CLASS:

 DEBTORS
BAD DEBTS
CREDITORS
DISCOUNT

 ASSIGNMENT BASED ON THE ACCOUNTING TERMINOLOGY

DEBTORS, BAD DEBTS, CREDITORS(CLICK BELOW FOR MY AUDIO)



 12.Debtor

Is a person or a firm to whom goods have been sold or services has been rendered on credit. The payment has not yet been received from them. They are the Assets to the Business. As they still owe some amount to the Business.

For example, if goods worth rupees 5000 have been sold to Mohan on credit, he will continue to remain the debtor of the business so long as, he does not make the full payment.


 13.  Bad Debts: 

It is the amount that has become irrecoverable from a debtor or when the debtor fails  to pay the money, it is a business loss and is called as  bad debts.



14 Creditors:

The term creditors represent those persons of firms from whom goods have been purchased or services procured on credit. The payment has not been made to them. Some money is still owing to them. 

For example 
If goods worth rupees 5000 are purchased from Gopal on credit, he will continue to remain the creditor to the firm so long as the full payment is not made to him.




DISCOUNT (CLICK BELOW FOR THE AUDIO)

DISCOUNT

  15  Discount:  is any type of reduction/rebate/ allowance in the price by the seller to the buyer.

  It is of two types:

  Trade discount and Cash discount.

  Trade discount

It is when discount is allowed by a seller to its customers at a fixed percentage on the list or catalogue price of the goods it is called trade discount.

    It is not recorded in the books of account as it is deducted in the invoice or cash memo itself from the gross value of goods. 

   Cash discount:

 When discount is allowed to the customers for making prompt payment it is called cash discount. For example, if a seller allows 2 % discount for payment within a week it will be called cash discount. It is always recorded in the books of accounts.

    For example,
 purchase goods from Kailash for rupees 20000 at trade discount of 10% and cash discount of 2%. Paid 60% of the amount immediately.

    In the above transaction total amount of the goods at the list price bought is rupees   20000.
    Trade discount is 10%.
    So, reduce the trade discount from the list price                         
    less 10%  OF 20000                                                                                                         2000
                                                                                                                                          ________

=                                                                                                                                          18000
                                                                                                                                          _________
The cash purchase is 

60% of 18000. 
 =                                                                                                                                          10800
Less cash discount (2% of 10800)                                                                                           216
                                                                                                                                            ________


Amount paid                                                                                                                        10584 
                                                                                                                                          _________
credit purchase   (40% of 18000)                                                                                          7200



WATCH THE COMPLETE VIDEO AT EASE, THIS COVERS EACH ACCOUNTING TERMINOLOGY WITH CLARITY. MUST WATCH WHEN EVER YOU HAVE TIME.




DO THE GIVEN ASSIGNMENT 

ASSIGNMENT # 2

 QUESTION 1.
Fill in the Blanks: 

1. Amount which the proprietor has invested in a business is known as____.

2.  Amount which the firm owes to the outsiders is known as ______.

3. _____ is the cost incurred in producing goods and services.

4. Revenue means the income of a _____ nature. 

5. The term 'sales' is used only for the sales of ______ and is never used for the sale of ______.

6. The persons who still owe some amount to the business are termed as ______.

7. The persons to whom money is owing by the firm are termed as ______.

8. Assets held for continued use in the business and not meant for resale are termed as ______.

9. ______ are those assets which have a physical existence and which have been which can be seen or felt.

10. ______ refer to those liabilities which are to be paid normally within one year.
QUESTION 2.


READ THE BUSINESS TRANSACTIONS OF ' PARAG & COMPANY'  GIVEN BELOW



Mr. PARAG commenced business in electronic goods with a initial capital of Rs.1500000.

Out of the said Rs.1500000 he paid Rs.1000000 towards purchase of goods. 

He further spent Rs.200000 on furnishing the shop and Rs.35000 for purchase of computer and printer. 
Rs.10000 in yet to paid to the supplier of computer.

He sold goods costing Rs.500000 for Rs.700000 in cash and
 goods costing Rs.250000 for Rs.310000 on credit. 

Goods sold on credit for Rs.25000 were returned being defective. 

These goods costing Rs.20000 were returned to the supplier.

Looking into the response he decided to trade in home appliances for Rs.800000 out of which purchases of Rs.200000 were on credit.

Due to earthquake 2 LCD Television costing Rs.50000 were completely destroyed.

Mr.Parag received an insurance claim of Rs.30000.

A Customer purchased goods costing Rs.225000 for Rs.300000 and was allowed a discount of Rs.15000.
He was further allowed discount of Rs.5000 for payment within agreed time.

He paid salary to shyam of Rs.55000, Rs.5000 yet to be paid.

He insured the goods and paid insurance premium of Rs.10000 out of this Rs.5000 are for the next year.

Mr Parag withdrew Rs.30000 for his personal use.

You are required to answer the following questions.

01. What is the amount of the capital?

02. What is the amount of the fixed assets?

03. What is the amount of purchases?

04. What is the amount of long term liabilities?

05. What is the amount current liabilities?

06. How much expenses incur during the year?

07. What is the amount of prepaid expenses?

08. What is the amount of outstanding expenses?

09. What is the amount due from debtors?

10. What is the amount due to creditors?

11. What is the value closing stock?

12. What is the amount of trade discount?

13. What is the amount of cash discount?

14. What is the amount of drawings?

15. What is the amount of sales return?

16. What is the amount of purchase return?

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