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Additional info for Accounting Principles 1
Don’t worry; its uses are very limited and it is not as difﬁcult as you might assume when you ﬁrst use it. It is very useful as a revision aid. The journal is also a popular examination topic, favoured by examiners at all levels in accounting. The journal is used when we cannot comfortably ﬁnd another book of prime entry to use. Its layout is different from the day books described above.
Each individual entry in the purchase returns day book is then posted to the debit of the respective suppliers account in the purchase ledger. ) Sales that are not acceptable are returned by the customer and a credit note is sent. A copy of the credit note will be retained and this is the source document from which the sales returns day book is written up. When convenient, the list is added and the total is posted to the debit of the sales returns account (the goods have been received). The sales returns account is sometimes known as the returns inwards account.
The trading account 25 CHAPTER Four The proﬁt and loss account A person who is in business will endeavour to generate proﬁts. She will use some of those proﬁts in order to pay for her housekeeping, holidays, hobbies and so on. She may ‘plough back’ some of the proﬁts to make the business more efﬁcient so that greater proﬁts may be generated in the future. You may use all your allowance or wage from a part-time job to buy DVDs, CDs, computer games or to download singles or albums to your iPod, or you may spend it on other everyday living costs.