Tag: elements of book keeping and accountancy

A joint venture is an arrangement in which two or more parties agree to pool their resources for the purpose of a specific task or transaction.

A joint venture account is prepared for measurement of venture profit. This account is debited with all venture expenses and credited with all sales or collections. The excess balance of credit side over the debit side shows the profit on joint venture and vice versa. Profit /Loss are transferred to co-venturers’ accounts in the profit-sharing ratio.

Goods bought on joint venture as well as expenses incurred in connection with the business are debited to the joint venture account and credited to the seller's account or the joint bank account.

Bills Receivable Book also known as a B/R book. 

According to money measurement concept, commission payable to a salesman is to be recorded in the books of accounts. It states that only those transactions should be recorded in the books of accounts that are capable of being measured in monetary terms.

A journal may be defined as the book of original or prime entry containing a chronological record of the transactions from which posting is done to the ledger. The transactions are recorded first in the journal in the order in which they occur. The process of recording the transactions in a journal is called as journalizing.

 In bookkeeping and accounting, a ledger is a book (or record) for collecting historical transaction data from a journal and organizing entries by account. The ledger provides the transaction history and current balance in each accounting system account, throughout the accounting period.

The customer may return the goods. 

Thus, goods sold that are returned by the customer or buyer, are recorded in the Sales Return Book. 

The Credit Note contains the name of the customer, details of goods returned and reason thereof. Each Credit Note is dated and serially numbered.

When the goods purchased on credit are returned to the supplier, these are recorded in the Purchase return book. Sometimes, goods purchased can be defective or of low quality, etc. and hence, need to be returned. A separate book is maintained for the purchase return and these are not deducted from the purchases in the Purchase book. Also, Purchase return is recorded at the net amount on the invoice.

Profit on sale of furniture account is a nominal account the golden rule regarding which says “ All expenses and losses should be debited and all income and gains should be credited” as we are earning income from selling we have to credit this account.

Cash A/c Dr.

To Sales A/c.