Class 11 Accountancy - Chapter Recording of Transactions - 2 NCERT Solutions | What is difference between trade discoun
What is difference between trade discount and cash discount?
Trade Discount
1) This discount is allowed by wholesaler or manufacturer to the retailer at a fixed percentage on the listed price of goods.
2) It is allowed when goods are purchased in bulk, i.e., large quantity.
3) It is not recorded separately in the books of accounts.
4) For example, if a trader sells goods of the list price of ₹1,00,000 at 20% trade discount for cash, the entry will be:-
| Cash A/c Dr. | 80,000 | |
| To Sales A/c | 80,000 |
Cash Discount
1) Cash Discount is allowed if the customer makes the payment immediately or within a fixed period.
2) It is allowed when payment is made on or before a specified date.
3) It is recorded separately in the books of accounts.
4) For example, if a trader sells goods of the list price of ₹20,000 at 10% trade discount and 2% cash discount, the net amount will be calculated as under: ₹
List Price 20,000
Less: Trade Discount @ 10%. 2,000
18,000
Less:. Cash Discount @ 2%. 18,000 × 2/100 360
17,640
It means that ₹17,640 will be paid if the payment is made in cash.
More Questions From Class 11 Accountancy - Chapter Recording of Transactions - 2
- Q:-
Total of these transactions is posted in purchase account :
(i) Purchase of furniture
(ii) Cash and credit purchase
(iii) Purchases return
(iv) Purchase of stationery - Q:-
Briefly state how the cash book is both journal and a ledger.
- Q:-
State whether the following statements are True or False :
(a) Journal is a book of secondary entry.
(b) One debit account and more than one credit account in a entry is called compound entry.
(c) Assets sold on credit are entered in sales journal.
(d) Cash and credit purchases are entered in purchasejJournal.
(e) Cash sales are entered in sales journal.
(f) Cash book records transactions relating to receipts and payments.
(g) Ledger is a subsidiary book.
(h) Petty cash book is a book having record of big payments.
(i) Cash received is entered on the debit side of cash book.
(j) Transaction recorded both on debit and credit side of cash book is known as contra entry.
(k) Balancing of account means total of debit and credit side.
(l) Credit purchase of machine is entered in purchase journal. - Q:-
Credit balance of bank account in cash book shows :
(i) Overdraft
(ii) Cash deposited in our bank
(iii) Cash withdrawn from bank
(iv) None of these - Q:-
When a firm maintains a cash book, it need not maintain ;
(i) Journal Proper
(ii) Purchases (journal) book
(iii) Sales (journal) book
(iv) Bank and cash account in the ledger - Q:-
The periodic total of sales return journal is posted to :
(i) Sales account
(ii) Goods account
(iii) Purchases return account
(iv) Sales return account - Q:-
Double column cash book records:
(i) All transactions
(ii) Cash and bank transactions
(iii) Only cash transactions
(iv) Only credit transactions - Q:-
Fill in the Correct Words :
(a) Cash book is a ......... journal.
(b) In Journal proper, only......... discount is recorded.
(c) Return of goods purchased on credit to the suppliers will be entered in ...... Journal.
(d) Assets sold on credit are entered in .........
(e) Double column cash book records transaction relating to ......... and .........
(f) Total of the debit side of cash book is ......... than the credit side.
(g) Cash book does not record the ......... transactions.
(h) In double column cash book ......... transactions are also recorded.
(i) Credit balance shown by a bank column in cash book is .........
(j) The amount paid to the petty cashier at the beginning of a period is known as ......... amount.
(k) In purchase book goods purchased on ......... are recorded. - Q:-
Goods purchased on cash are recorded in the :
(i) Purchases (journal) book
(ii) Sales (journal) book
(iii) Cash book
(iv) Purchases return (journal) book - Q:-
What is petty cash book? How it is prepared?
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Recently Viewed Questions of Class 11 Accountancy
- Q:-
Why is it important to adopt a consistent basis for the preparation of financial statements? Explain.
- Q:-
If a transaction is properly analysed and recorded:
(a) Only two accounts will be used to record the transaction.
(b) One account will be used to record transaction.
(c) One account balance will increase and another will decrease.
(d) Total amount debited will equals total amount credited. - Q:-
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- Q:-
Recording of transaction in the Journal is called:
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(ii) Posting
(iii) Journalising
(iv) Recording - Q:-
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a. Understandability
b. Relevance
c. Comparability
d. Reliability - Q:-
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Tick the Correct Answer
Which of the following is not a business transaction?
a. Bought furniture of ₹ 10,000 for business
b. Paid for salaries of employees ₹ 5,000
c. Paid sons fees from her personal bank account ₹ 20,000
d. Paid sons fees from the business ₹ 2,000 - Q:-
What are the steps taken by an accountant to locate the errors in the trial balance?
- Q:-
Cash withdrawn by the Proprietor should be credited to:
(i) Drawings account
(ii) Capital account
(iii) Profit and loss account
(iv) Cash account
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