Question

Paid carriage and cartage on goods sold to Manohar chargeable to his account, 10
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Answer 1

Answer:

Purchase a/c dr. Amount.

Carriage a/c dr. Amount.

To cash a/c cr. Amount.

(Being goods purchased and carriage paid.)

Explanation: As per the traditional approach, the purchase account is debited because it is an expense to a business as a business trades with goods and thus it is a nominal account. Accounting to the rule of nominal account we debit all expenses and losses and credit all incomes and gains of a business. The carriage account is debited because it is also an expense and as well as a nominal account. We debited both of the expenses separately because goods are not the assets of a business and so if we added the carriage expenses then it would be difficult to calculate the actual cost of goods or COGS and profit. We only add these types of expenses with assets. The cash account is credited because it's an assest of a business and thus a real account. According to the rule of real account, we debit what comes into a business and credit what goes out of the business.