Q4. If, Sohan purchases goods on credit from Mohan, what will be Mohan for Sohan in accounting terms?
Answers
Answer:
When we purchase something on credit, then we need to create a liability account. It is because we have not paid anything like cash to the seller from which we bought the goods.
As we will be paying it later, we need to show this in our books. So the entry for this will be
Dr. Purchase account
Cr. Accounts payable /Mohan account
When we pay or clear the balance then we need to process the below entry
Dr.Accounts payable /Mohan account
Cr. Cash/bank account
Explanation:
Answer:
Answer:When we purchase something on credit, then we need to create a liability account. It is because we have not paid anything like cash to the seller from which we bought the goods.
Answer:When we purchase something on credit, then we need to create a liability account. It is because we have not paid anything like cash to the seller from which we bought the goods.As we will be paying it later, we need to show this in our books. So the entry for this will be
Answer:When we purchase something on credit, then we need to create a liability account. It is because we have not paid anything like cash to the seller from which we bought the goods.As we will be paying it later, we need to show this in our books. So the entry for this will beDr. Purchase account
Answer:When we purchase something on credit, then we need to create a liability account. It is because we have not paid anything like cash to the seller from which we bought the goods.As we will be paying it later, we need to show this in our books. So the entry for this will beDr. Purchase accountCr. Accounts payable /Mohan account
Answer:When we purchase something on credit, then we need to create a liability account. It is because we have not paid anything like cash to the seller from which we bought the goods.As we will be paying it later, we need to show this in our books. So the entry for this will beDr. Purchase accountCr. Accounts payable /Mohan account When we pay or clear the balance then we need to process the below entry
Answer:When we purchase something on credit, then we need to create a liability account. It is because we have not paid anything like cash to the seller from which we bought the goods.As we will be paying it later, we need to show this in our books. So the entry for this will beDr. Purchase accountCr. Accounts payable /Mohan account When we pay or clear the balance then we need to process the below entryDr.Accounts payable /Mohan account
Answer:When we purchase something on credit, then we need to create a liability account. It is because we have not paid anything like cash to the seller from which we bought the goods.As we will be paying it later, we need to show this in our books. So the entry for this will beDr. Purchase accountCr. Accounts payable /Mohan account When we pay or clear the balance then we need to process the below entryDr.Accounts payable /Mohan accountCr. Cash/bank account