Ledger Trial Balance and BRS Test - 3

Amount Invested by owner is Called Capital. It is an liabilitiy on Business which  business have to pay at the winding up of business So Owner is called Creditor for the Capital amount.

The genral equation in accountancy is Capital = Assets - Liabilities.

Total Liabilities are sum total of Capital or other Liabilities.

When a seller sell some goods on cash he provides a receipt of sale that receipt or source document on the basis of which we record transaction in accounts is called cash memo.

capital is the amount invested by owner. when owner introduce some additional amount it will increase cash or bank balance (which is assets) and Capital .

Purchaser have to pay the amount in future when goods are purchased on credit which increases the liability.

purchase book is a book in which only credit purchase transaction can be recorded.

This is the basic accounting equation of assets, liability and capital. It is the foundation of double entry system. Always the assets will be equal to liabilities + capital.

Transfer Voucher is prepared for non cash transaction. Hence for recording of Purchase return and sales Return entry it is prepared.

Creditors are liability for the entity. When company pays them then it will reduce the bank and creditors also.

Debtors are assets and bank balance is also asset in business. When Company Receive cheque from debtor it will increase the bank balance on the same time debtors gets reduced. Hence Both the effect on assets side. there is Increase in bank or decrease in debtors , So there will be No effect.