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A cheque (Check) is an original signed document directed the bank to pay a stated amount of money to the person (payee) named on it or to the bearer of the instrument. The person who issues or draws the cheque is drawer and the person to whom the payment is made or to whom it is issued is drawee. It is presented before the counter to get payment. A cheque copy is not an original document so it is just an evidence to support Transactions for someone’s own records. It can’t be used to make payment. When original check is presented for payment, then a copy of check is created to show that the payment is made to payee an an evidence and to support Accounting transactions.

When two or more errors or the sum of more than one error cancels the accounting effect of each other, it is called a compensating error as the effect of wrong amount of debit and the same wrong amount of credit cancels each other effects and hence Trial Balance agrees. For example, if sales of $1000 to Mr. A on account is entered in Mr. A (debit) as $100 and purchases of $1000 to Mr. B is entered in Mr. A (credit) as $100. In this case, the posting of wrong amounts to debit and credit side in the ledger’s accounts cancel the effects of each other and as a result the trial balance agrees but there is a compensating error. On the debit side there is a shortage of $900 ($1000 - $100) which is compensating by another shortage of credit of $900.

1.  A Shopkeeper Bought Few Bags For $1400 And Sold Them At $2560. Compute His Profit. Given: Cost of Bags = $1400 Sales = $2560 Find: Gross Profit = ? We know that Gross Profit is equal to Sales minus Cost of Sales , so we have: Gross Profit =  Sales - Cost of Sales Gross Profit =  $2560 - $1400 = $1160 So, shopkeeper earn $1160 profit (gain) on the sales ($2560) of bags purchased at the cost of $1400. 2. A Man Bought A Bicycle For 1200 He Sold It For 1500 Find The Profit Percent. By applying gross profit formula, we have: GP = $1500 - $1200 = $300 As we know that sales is the sum of cost of sales + gross profit, so we have Sales =  Cost + Gross Profit So, the Percentage of sales = Percentage of Cost + Percentage of Gross Profit As, the percentage of Sales is 100 i.e., it is the base, so we have: Percentage of GP = Amount of GP / Amount of Sales X 100 Percentage of GP = 300 / 1200 X100 = 25% 3. A Man Buys A Cycle For $1...

Solution To Question Here: Cash = 10% X 800 = $80 Accounts Payable = 800 – 80 = $720 The combined journal entry to record this Transaction is shown below:                                                    Desk a/c  $800                                                                    Cash a/c  $80                                                                    Accounts Payable a/c  $720                             ...

Solution To Multiple Choice Question (MCQ) After the merchant buys merchandise, it is sold at a higher price called the Selling Price (SP) because the goods or merchandise purchased at the cost price but sold by merchant or seller at selling price to get profit out of Sales . He earned a percentage of profit on every sales made to buyer during the accounting cycle. SP is equal to the cost plus gross profit while gross profit is the difference between SP and cost of the merchandise / goods / products as shown below: SP   =   Cost + Gross Profit Gross Profit  =  SP  -  Cost If the seller sells the goods at cost price, then at this point he gained no profit and suffered no loss called break even point. The difference between selling price and sale price is that SP is the price at which the goods is actually sold to buyer while sale price is the price of goods offered to buyer at a discount. In revenue discount, the Revenue is earned afte...

Computer consumables (CC) are computer-based products which are consumed up on regular basis such as CDs & DVSs, USB cables, ink cartridges, power adaptors, etc., which are necessary to perform various computer tasks such as storing data, printing documents, screen wiping / screen cleaning, using of camera, network cables and routers, etc. When a business incurred expenses for CC, then in Income Statement such expenses are categorized as computer consumables expenses in general administrator expenses. When these expenses are incurred only for business purposes, we debit computer consumables account and when these are closed to Income Summary Account , we credit these types of expenses in the books of accounts. To show these kinds of expenses in books of accounts, computer consumable account is created.

The expired portion of Capital Expenditure or direct cost is an Expense . So, the correct answer of this multiple choice question is (C), because in an expense, we may enjoy the benefit with the use of an asset. So, the expired portion of an asset, which may be enjoyed by the business with the passage of time, represents an expense. A business may start to gain benefits when an asset is utilized. An example of direct cost is arised in case of expiration of  Advance Rent paid for the cost production or business operations. Now, when the business uses the rent facilities, i.e., used the buildings for the production of goods or carrying on the operations, then the business may start to get benefits i.e., delivery of goods to customers, more sales due to attractive building, etc. With the beginning of expiration of the direct cost of prepaid rent. Such expired portion of prepaid rent is a rent expense account. In case of capital expenditure i.e., an addition to furniture, may p...