Accountancy

Narrations are given at the end of each journal entry. Each journal entry includes the date, the amount of the debit and credit, the titles of the accounts being debited and credited (with the title of the credited account being indented), and also a short narration of why the journal entry is being recorded.

Cost of a fixed asset – Accumulated depreciation expenses of the fixed asset = Book value of a fixed asset. Except for the cost of land, the cost of a fixed asset is spread over its estimated useful life to the business; the amount allocated to each period is called depreciation expense.

Purchases + opening stock – closing stock = Cost of goods sold.

Tax & freight paid on sale is a selling expense. Selling expense (or sales expense) includes any costs incurred by the sales department.

Postdated cheques are considered as Accounts receivable. If the postdated check was received as payment on accounts receivable, the accounts receivable balance is not reduced until the date of the check.

Credit note is the basis for recording a transaction in Sales return journal. A credit note or credit memo is a commercial document issued by a seller to a buyer.