-Pushpender Kumar Academic Content Writer at Edumarz
Till now, We have learned how a firm records its business transactions.
So let’s take a look at what we have learned.
The firm enters into several transactions daily. So because of the huge no. of transactions firm records its transactions based on source documents.
The firm records its transactions in the following books:
Cash Book: All cash-related business transactions are recorded in Cash Book.
Purchases Book: All credit purchases of goods are recorded in the Purchases Book.
Sales Book: All credit sales of goods are recorded in the Sales Book.
Purchases Return Book: All purchase returns of goods are recorded in Purchases Return Book which goods purchased on credit from a supplier.
Sales Return Book: All sale returns of goods are recorded in Sales Return Book which goods are sold on credit to a customer, etc.
Journal proper: The rest of the transactions are recorded in Journal Proper which are not recorded in Special Journal.
After recording transactions in respective books. Entries are posted in Ledger Accounts in respective accounts.
Then Ledger Accounts are balanced by totaling both sides of accounts and the difference of both sides is recorded on that side which is short by writing the words ” balance c/d”.
But accounts of expenses or losses and gains or revenues are not balanced but are closed by transferring to Trading Account and Profit and Loss Account.