BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Purchases will be credited if goods are given as charity. When accounting for goods given as charity, purchases are reduced with the exact cost of goods contributed. The amount is reduced from purchases in the trading account. It is shown as an expense on the debit side of the income statement.

Detailed explanation-2: -Goods worth Rs 1000 given on charity should be credited to Purchases Account as it will reduce the stock of goods.

Detailed explanation-3: -Goods given as charity journal entry is recorded by debiting the charity account and crediting purchases. That’s because there will be decrease of stock in hand. We need to record the entry on a cost basis, and also, no profits are to consider here.

Detailed explanation-4: -Charity account is debited as it is treated as an expense for the company. Purchases account is credited as goods given as charity from own stock reduces the amount of purchases so we credit the purchase account to reduce the amount of purchases.

Detailed explanation-5: -A Charity Account is a segregated client account, holding all the details of your charitable giving in one place. It allows you to make tax-free donations to LCVS and/or any other charity or charitable organisation and, like a bank account, it records all the income and expenditure.