18. From the following items, state the nature of accounts and state the balance also.
a) Rent Received g) State Bank of India
b) Purchases h) sales return
c) Drawings i) Insurance premium
d) Discount Allowed j) Goodwill
e) Carriage k) Patents
f) Capital l) Creditors
Answers
Answer:
1.Rent received is shown in income side of profit and loss account. Some time rent is not received before the finalization of final account for that particular financial year.
2.The purchases account is a general account in which is recorded the inventory purchases of a business.
3.A drawing account is a contra account to the owner's equity. The drawing account's debit balance is contrary to the expected credit balance of an owner's equity account.
4.When the seller allows a discount, this is recorded as a reduction of revenues, and is a debit to a contra revenue account.
5.Carriage refers to the cost of transporting goods into a business from a supplier, as well as the cost of transporting goods from a business to its customers.
6.The capital account, on a national level, represents the balance of payments for a country.
7.There are 7 different types of current account which cater different requirements depending on the type of account. They all differ when it comes to services and charges.
8.Sales returns is a nominal account. Generally, sales returns show zero or favourable balance (Debit balance).
9.Life insurance premium is classified as a personal account, since the insurance premium paid represents the amount paid for an individual.
10.Goodwill is recorded as asset on the acquiring company's balance sheet under the long-term assets account.
11.Patent account is asset and hence, is classified as a real