Question

Classify the following into Assets; Liabilities; Expenses; Revenues
Cash; Debtors; Creditors; Salary; Discount received; Rent received; Discount

Answer 1

ANSWER :

• ✠ Cash ➨ Assets

✎ Cash comes under Assets. Whether it is cash in hand or cash at bank, it is always treated as Assets.

• ✠ Debtors ➨ Assets

✎ Debtors comes under Assets. Debtors means the amount receiable from the party to whom goods is sold or service is provided on credit.

• ✠ Creditors ➨ Liabilities

✎ Creditors comes under Liabilities. Creditors means the amount payble to the party from whom goods is purchased or service is received on credit.

• ✠ Salary ➨ Expenses

✎ Salary is comes under Expenses if salary is paid. But in case of Salary is received, then it will be treated as Revenue.

• ✠ Discount received ➨ Revenues

✎ Discount received comes under Revenues. Discount received means the reduction in the price of goods payable to the seller.

• ✠ Rent received ➨ Revenues

✎ Rent received comes under Revenues. Rent received means in rental income received from a property given on rent.

• ✠ Discount ➨ Expenses

✎ Discount comes under Expenses if it is allowed. Discount is the reduction in price of goods.

________________________________________________________________

KNOW MORE :

❒ Accounts are classified on the basis of two approaches :-

• Traditional Approach or English Approach

• Modern Approach or American Approach

❒ On the basis of Traditional Approach or English Approach of accounts classification, there are three accounts heads :-

• Personal Accounts

• Real Accounts

• Nominal Accounts

❒ On the basis of Modern Approach or American Approach of accounts classification, there are five accounts heads :-

• Assets Accounts

• Liabilities Accounts

• Capital Accounts

• Revenue Accounts

• Expenses Accounts