BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Sales A/c
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Purchases A/c
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Donation A/c
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Cash A/c
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Detailed explanation-1: -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 and the purchase account is credited.
Detailed explanation-2: -Treat a cash donation as you would any other expense. Make sure to debit your Donation account and credit the appropriate Bank/Cash account.
Detailed explanation-3: -When goods are bought whether in cash or on credit, creditors account will be credited.
Detailed explanation-4: -Cash account will be credited if a company purchases building for cash. Cash is credited because cash is an asset account that decreased because cash was used to pay the bill.