Accounting

A document sent to customer when he returns the goods is called Credit note. A credit note or credit memo is a commercial document issued by a seller to a buyer.

A purchase book is a special purpose subsidiary book prepared by a business to record all credit purchases.

Assets = Liabilities + Owner's eq accounting equations is correct. It shows that a company's total amount of assets equals the total amount of liabilities plus owner's (or stockholders') equity.

Normally the Personal account and Real account are balanced. Only accounts relating to assets and liabilities ,that is real account and personal accounts are balanced periodically.

Different accounting policies can be adopted in the Valuation of inventories, Valuation of Investments and Calculation of depreciation.

The accounting equation is based on Dual aspect. The accounting equation is made visible in the balance sheet, where the total amount of assets listed must equal the total of all liabilities and equity.

Suspense account given in the trial balance will be entered in the Balance sheet. If the Trial Balance does not agree, the difference is put to Suspense A/c. Suspense A/c on credit side of Trial Balance will be entered on the liabilities side of Balance Sheet. Suspense A/c on debit side of Trial Balance will be entered on the assets side of Balance Sheet.

Wages, Carriage Inward, Octroi and Purchases, Wages, Coal Expenses sets of expense are the direct expense of business.

A Trial Balance contains the balances of Real A/c and Nominal A/c and Personal A/c.

When obligation is not probable or the amount expected to be paid to settle the liability cannot be measured with sufficient reliability, it is called Contingent liability. Contingent liability is a potential liability that may occur, depending on the outcome of an uncertain future event.