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Purchases Order VS Sales Order A Purchases Order is issued by the buyer to the seller informing him about the details of goods such as quantities of goods, agreed price, etc., whereas a Sales Order is issued by the seller or supplier to the buyer informing him about the mode of delivery of goods or services and payment. A purchase order is made at the time of ordering of goods or services to a seller while a sales order is made at the time of delivery of goods or services ready to be sent from the seller or supplier to the customer.

The Meaning Of Sales Order In Accounting A Sales order (SO) is issued by seller to buyer informing him about the details of goods or services sold to the buyer against the purchase order received. After receiving the seller order and checking the goods delivered to the buyer by the seller, the buyer makes payment for the goods or services delivered to him on the specified day.

What Does Purchase Order Mean In Accounting? A Purchases order (PO) is a docume nt issued by buyer to seller intimating for the sale of goods or services purchased on cash or credit. The purchases order contains quantities of items ordered, agreed price of goods or services, etc. The seller gets the information from the purchase order about the time of delivery of goods or services. The agreed price also helps him to collect the dues on time.

Inventory Subsidiary Ledger Accounts are prepared to record the inventory records of each product separately. The sum of each product’s balances are sum up and transferred to one single Inventory Control Ledger Account for the period. For Example, Product - A, Product - B and Product - C are traded in a A B C Company. All the balance from these Products A, B and C ledger accounts are controlled and sum up in inventory control ledger accounts.

Inventory Control Ledger Account Meaning I nventory Control Ledger Account is prepared to control the records of all the subsidiary inventory ledger accounts at one place. For Example, each product inventory ledger accounts are recorded separately and then the sum of these products’s are sum up in one inventory control ledger account. The sum of all of the inventory subsidiary ledger accounts’ balances is always equal to the closing balance of inventory control ledger account / stock control ledger account and hence the inventory control ledger account is reconciled with the inventory subsidiary ledger accounts for the accounting period. Companies, which use Perpetual Inventory System , prepare inventory control ledger account to reconcile it with the inventory subsidiary ledger accounts on daily basis while under  Periodic  Inventory System , it is reconciled at the end of the accounting period.

Income Summary Account In Accounting Income Summary Account is a Temporary Account which is prepared to close temporary accounts i.e. Revenues and Expenses when we prepare Closing Journal Entries at the end of the accounting period. All the revenues and expenses accounts are transferred to this account from Income Statement or Profit And Loss Account . Income summary account is prepared to close temporary accounts at the end of the accounting period. The N et income / N et profit or N et Loss for the accounting period calculated under this account is always equal to the net income or net loss shown in the income statement. The journal entries for closing revenues and expenses accounts are shown below: For Closing Revenues Accounts                                                  Revenues a/c   XXX                                                                       Income Summary a/c   XXX                                      

When Closing Entries are recorded, then all the Temporary Accounts i.e., Revenues  like Sales, Service Revenue, etc., and Expenses  like Rent Expense, Advertising Expense, etc., are closed to Income Summary Account (which is also closed). So, these temporary accounts are affected by passing closing journal entries. Dividend , which is a Contra Equity Account and distributed to shareholders of the company on the occurring of the profits, is also affected and it is deducted from Retained Earnings in order to find out net closing retained earnings which is the part of net income retained in the business. So, Revenues, Expenses, Income Summary Accoun t and Dividend are affected when we record closing entries. What Accounts Are N ot Affected B y Closing Entries All the Permanent Accounts (Assets, Liabilities & Equity) are not affected and these remain the same as these accounts have balances which are transferred

An Incentive Fees is a reward or incentive given to investment manager for managing the assets of a client’s business. It is also called Performance Fees as it is based upon the profits or positive returns gained in the utilization of the Assets of a client’s business. From the point of view of our business, it is an Expense which is recorded in the Income Statement . The journal entry to record Incentive Fees is shown below:                                         Incentives Fees a/c   XXX                                                                         Cash a/c / B ank a/c   XXX                                                                (Incentives Fees Paid)     Is there is a difference between incentive fees and performance Fees? N o, In fact, there is no difference between incentive fees and performance fees as both terms are used to define the fees paid to investment manager for mana

A performance fees is paid to investment manager for managing the Assets of a client in order to generate positive returns on investment created for such client. The investment manager manages the assets of the business of the client to generate profits on investment. When, performance fees is paid to investment manager for cash / bank, the following journal entry is recorded as shown below:                                   Performance Fees Expense a/c   XXX                                                                                      Cash a/c / B ank a/c   XXX                                                                    (Performance Fees Paid) As, performance fee is a Temporary Account , so it is closed to Income Statement at the end of the accounting period.

Management Fees And Performance Fees Management Fees is paid to the manager or management company against the services received by the company while in case of Performance Fees , the client company’s business assets are managed by investment manager who is responsible for generating profits on investment. Management fees is paid to management company for managing business operations whether the manager meets the targets or not while performance is paid by clients’company to investing managers only for generating positive returns on the investment of client’s business assets.

Why We Prepare the Source Documents In Accounting The Mai n or Primary Purpose of Source Document is to record initial record of any business transaction so that important and relevant information related to accounting data is recorded for further processing. There are various types of source documents such as invoices, purchases order, sales order, memos, etc., to do the work of initial recording of accounting date accurately.

Source Documents are those evidence documents which are used to record a business transaction. Examples of source documents are Invoices , Purchase Order, Sales Order, Memos, Cash Receipts, etc. Source Documents usually contain Date, Particulars, N ames and addresses of the parties between them a business transaction takes place, column of Amount, signature of the parties, etc. Source Documents are necessary as these are the basic parts of records of any business transaction and if there is any error or mistake in the fact and figures of the business transaction, then this error or mistake will continue to the whole process unless it is identified early by the accounts department.