BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Drawings and accruals
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Carriage outwards and prepayments
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Carriage inwards and rental income
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Opening inventory and purchase returns
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Detailed explanation-1: -Keeping in view the above discussion, the correct option is b. Carriage outwards and drawings.
Detailed explanation-2: -Carriage outwards is the seller’s expense to transfer the goods to the customer. It is selling expense and therefore an indirect expense. Hence, carriage outwards appearing the trial balance will appear on the debit side of P & L A/c.
Detailed explanation-3: -Both sales and discount received will be shown on the credit side of the trial balance.
Detailed explanation-4: -The rules for preparing a trial balance are as follows: All the assets must be recorded on the debit side. All the liabilities must be recorded on the credit side. All incomes or gains must be recorded on the credit side.
Detailed explanation-5: -The carriage inwards account is written off to the trading account at the end of the accounting period. When the buyer sells the goods to his customer, he incurs further delivery charges. This cost is referred to as ‘carriage outwards”. This costs are debited to the carriage outwards account in the general ledger.