1st slide
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Hello Friends,
Welcome back to Veera's Channel.
Free Training For Finance Interviews
In this class we are going to continue our discussion on Subsidiary books which we started in our previous class and will learn about two new concepts called Debit note and credit note.
With No further delay lets start.
Third Slide
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As per our previous discussion on Books of Orginal entry, we have the following subsidiary books or subjournals
If you haven't watched our previous class on Subsidiary books please do watch it before continuing with this class for better understanding, I'm providing the links to my previous classes in the below video description
Coming back to our previous discussion, what subsidiary books we have?
We have Cash book, Purchases book, Sales Book, Purchases Return, Sales Return, Bills payable, Bills receivable and finally Journal Proper
We already discussed a lot on Cash Book in the previous class about types of cash book Contra entry etc, there is one last topic which we need to discuss on cash book that is Petty cash book
Petty Cash book is a seperate book used for entering transactions related to small or petty payments like buyings pens or other stationary for the business
Why we are having seperate book for this, because if we enter all this small amounts also in the main cash book the cash will become bulky and it will create unecessary confusion as well
All this small amounts are given to a cashier called as petty cashier and he will take care of all this small transactions
The Small amount for making this Petty payments is called Imprest money and the entire process of recording small payments is called Imprest System
Remeber this name as this has been asked in the written test once
So thats all about cash book, we will move to the next subsidiary books
Fourth Slide
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Purchases Book
Suppose Goods are purchased by our business
Let us assume we purchased this goods on Credit
So whenever we purchase goods on credit we record it in our purchased book
Let us assume now that instead of credit purchase we have purchased goods by paying cash then where do we do record it?
We record them in cash book
So hope you got the point where ever we purchase goods on credit we record them in Purchases book and if we purchase goods by paying cash we record them in Cash book
Similar with the sales book, if our Business is selling goods on credit we record the transaction in Sales book
One more thing to remember here is Purchasing in the sense we are getting goods, selling or sales means we are giving goods, Its important to know and remember this difference of sales and purchases which we will discuss further in Cost-Volume profit analysis
So coming back when we sell our goods on credit we record it in sales book
Let us assume now that instead of credit sale we have sold goods by receiving cash then where do we do record it?
We record them in cash book as it will become a cash transaction
Now in purchases book we get the goods from the supplier, but if some of the goods are deffective what we do we return them
Returning Goods will be entered in a seperate book called as Purchases Returns book
So remember when ever goods are returned we record it under purchases return book
Similarily we sold our goods to Customer, if some of the goods we sold are defective then customer will return the goods back to us and we enter those transactions in Sales return book
So remeber when ever customer returns goods we record it under sales returns book
For better understanding of all these things, let us see some transactions
Fifth Slide
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on jan 1 purchased goods from ABC Co for Rs 1000, as this is related to credit purchases we record it in Purchases book
Here how we record it Purchases A/c Dr For 1000 to AbC Co A/C for 1000
Let us see the next transaction
on jan 2 we found that some of the goods we purchased are deffective, Deffective goods of worth Rs.200 are returned, as this is related to returns of our purchases we record it in Purchases return book as
we put the date first as Jan 2 and write as ABC Co A/C Dr for 200 to Purchases Return Account for 200
Here note this we are debiting the Supplier ABC account, when we do this we send a note to ABC Co mentioning that we have debited your account for an amount of how much, Rs.200
That note is called as debit note, So hope you understood what is meant by a debit note
Remeber debit note is related to Purchases return book
Now lets take another transaction
On Jan 3 we sold goods to XYZ company for an amount of Rs.9000 on credit as this is a credit sale we record it in Sales Book
Here how we record it XYZ Co A/c dr for 9000 to Sales A/c for 9000
on Jan 4 the customer XYZ Co found that some goods of worth 2000 we sold to them are deffective so on Jan 4 they returned those goods to us back
Once the goods are returned We are going to record this in our sales return book as Sales return A/c Dr for an amount of Rs. 2000 To XYZ Co A/C for 2000
Here note this we are debiting our Sales Retun A/c and crediting XYZ Co A/c, so we send which note here, Credit note to XYZ Co
So remember we get Credit note in Sales Return Book.
Sixth Slide
-----------
Lets recap what we learnt today
All credit purchases will be recorded in which book - Purchases Book
All Credit sales will be recorded in which book - Sales Book
All cash sales and purchases are recorded in which book, I want you to think about this answer, so it is nothing but Cash book
Our business is returning goods to supplier then we record it in purchases return and send a debit note
Customer is returning goods to us then we record it in Sales return and send a credit note to customer
Hope you enjoyed this video, don't forget to like, share and subscribe our channel if have doubts please mention it in Comments session, so that we try to answer them in next classes
We publish our next interesting class on Next sunday that is 11th August 2019 dont miss it see you next week guys Ba bye
-----------
Hello Friends,
Welcome back to Veera's Channel.
Free Training For Finance Interviews
In this class we are going to continue our discussion on Subsidiary books which we started in our previous class and will learn about two new concepts called Debit note and credit note.
With No further delay lets start.
Third Slide
------------
As per our previous discussion on Books of Orginal entry, we have the following subsidiary books or subjournals
If you haven't watched our previous class on Subsidiary books please do watch it before continuing with this class for better understanding, I'm providing the links to my previous classes in the below video description
Coming back to our previous discussion, what subsidiary books we have?
We have Cash book, Purchases book, Sales Book, Purchases Return, Sales Return, Bills payable, Bills receivable and finally Journal Proper
We already discussed a lot on Cash Book in the previous class about types of cash book Contra entry etc, there is one last topic which we need to discuss on cash book that is Petty cash book
Petty Cash book is a seperate book used for entering transactions related to small or petty payments like buyings pens or other stationary for the business
Why we are having seperate book for this, because if we enter all this small amounts also in the main cash book the cash will become bulky and it will create unecessary confusion as well
All this small amounts are given to a cashier called as petty cashier and he will take care of all this small transactions
The Small amount for making this Petty payments is called Imprest money and the entire process of recording small payments is called Imprest System
Remeber this name as this has been asked in the written test once
So thats all about cash book, we will move to the next subsidiary books
Fourth Slide
------------
Purchases Book
Suppose Goods are purchased by our business
Let us assume we purchased this goods on Credit
So whenever we purchase goods on credit we record it in our purchased book
Let us assume now that instead of credit purchase we have purchased goods by paying cash then where do we do record it?
We record them in cash book
So hope you got the point where ever we purchase goods on credit we record them in Purchases book and if we purchase goods by paying cash we record them in Cash book
Similar with the sales book, if our Business is selling goods on credit we record the transaction in Sales book
One more thing to remember here is Purchasing in the sense we are getting goods, selling or sales means we are giving goods, Its important to know and remember this difference of sales and purchases which we will discuss further in Cost-Volume profit analysis
So coming back when we sell our goods on credit we record it in sales book
Let us assume now that instead of credit sale we have sold goods by receiving cash then where do we do record it?
We record them in cash book as it will become a cash transaction
Now in purchases book we get the goods from the supplier, but if some of the goods are deffective what we do we return them
Returning Goods will be entered in a seperate book called as Purchases Returns book
So remember when ever goods are returned we record it under purchases return book
Similarily we sold our goods to Customer, if some of the goods we sold are defective then customer will return the goods back to us and we enter those transactions in Sales return book
So remeber when ever customer returns goods we record it under sales returns book
For better understanding of all these things, let us see some transactions
Fifth Slide
-----------
on jan 1 purchased goods from ABC Co for Rs 1000, as this is related to credit purchases we record it in Purchases book
Here how we record it Purchases A/c Dr For 1000 to AbC Co A/C for 1000
Let us see the next transaction
on jan 2 we found that some of the goods we purchased are deffective, Deffective goods of worth Rs.200 are returned, as this is related to returns of our purchases we record it in Purchases return book as
we put the date first as Jan 2 and write as ABC Co A/C Dr for 200 to Purchases Return Account for 200
Here note this we are debiting the Supplier ABC account, when we do this we send a note to ABC Co mentioning that we have debited your account for an amount of how much, Rs.200
That note is called as debit note, So hope you understood what is meant by a debit note
Remeber debit note is related to Purchases return book
Now lets take another transaction
On Jan 3 we sold goods to XYZ company for an amount of Rs.9000 on credit as this is a credit sale we record it in Sales Book
Here how we record it XYZ Co A/c dr for 9000 to Sales A/c for 9000
on Jan 4 the customer XYZ Co found that some goods of worth 2000 we sold to them are deffective so on Jan 4 they returned those goods to us back
Once the goods are returned We are going to record this in our sales return book as Sales return A/c Dr for an amount of Rs. 2000 To XYZ Co A/C for 2000
Here note this we are debiting our Sales Retun A/c and crediting XYZ Co A/c, so we send which note here, Credit note to XYZ Co
So remember we get Credit note in Sales Return Book.
Sixth Slide
-----------
Lets recap what we learnt today
All credit purchases will be recorded in which book - Purchases Book
All Credit sales will be recorded in which book - Sales Book
All cash sales and purchases are recorded in which book, I want you to think about this answer, so it is nothing but Cash book
Our business is returning goods to supplier then we record it in purchases return and send a debit note
Customer is returning goods to us then we record it in Sales return and send a credit note to customer
Hope you enjoyed this video, don't forget to like, share and subscribe our channel if have doubts please mention it in Comments session, so that we try to answer them in next classes
We publish our next interesting class on Next sunday that is 11th August 2019 dont miss it see you next week guys Ba bye
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