Unit-3 Basic Accounting Terms and Concepts

This unit explains some of the terms which are commonly used in accounting and also the basic concepts underlying the accounting system.

Show the dual effect of the following business transaction on assets and  liabilities of a business unit.
a)Purchased goods for cash for Rs. 500.
b)  Purchased goods on credit for Rs. 800 .
c)  Paid Rs. 300 to a creditor.
d)  Received Rs. 500 from a debtor.

Answer

a) Stock increases and cash decreases.

b) Stock increases and creditors increases.

c) Cash increases and creditors decreases.

d) Cash increases and debtors decreases.