NOTES for week 2 accounting £tue ( chapt 6 ).odt - Topic Retailer You can tell a company is a Retailer by looking at there IS Expenses are grouped by

NOTES for week 2 accounting £tue ( chapt 6 ).odt - Topic...

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Topic : Retailer You can tell a company is a Retailer by looking at there IS Expenses are grouped by function : selling and distribution expenses Administrative expenses ( wages … ) finance expenses In real life they summaries like this. What interesting about this is : SALES-COGS = GP that how we know is a retailer There are 2 part of retailer Acquire inventory – sell inventory – collect cash Income always increase capital Normal balance of capital account is = A= L plus OE Drawing = Debit . Because it will decrease your capital . Slides 14 = Its about cash term , the discount that you learn in Olevel . Why we need trade discount ? 1. So the business got cash to stay alive Credit terms – e.g. 2/10, n/30 2% discount if paid within 10 days, otherwise 30 days Create incentive to pay early ¨
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For example sales to AA for 1800rm If no discount : AA 1800 DR Sales 1800 CR If discount : Cash 1764 DR D.A : 36 DR Account rec : 1800 CR Two type of discount , trade discount and Cash Trade discount is not recorded Trade discounts are used to determine actual sale price, and therefore are not recorded separately in the accounts For example AA-1800 DR Sales 1800 CR
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  • Winter '15
  • Revenue, 30 days, 10 days, 30 2%

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