Book entry of shares trading

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Rakesh Seth (Querist)

26 June 2022 Can you please help to give example of one entry each of sale and purchase transaction for delivery trade.I mean which account to be debited and which account to be credited.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

06 July 2024 Certainly! Here are examples of sale and purchase transactions for delivery trade, along with the corresponding accounts to be debited and credited:

### Sale Transaction Example:

**Sale of Goods for Cash:**

Let's say a company sells goods for cash. Here's how the transaction is recorded:

1. **Debit: Cash Account**
- To record the receipt of cash from the sale.

2. **Credit: Sales Account**
- To record the revenue generated from the sale.

**Journal Entry:**

- **Debit** Cash Account
- **Credit** Sales Account

### Purchase Transaction Example:

**Purchase of Goods on Credit:**

Let's say a company purchases goods on credit from a supplier. Here's how the transaction is recorded:

1. **Debit: Purchases Account**
- To record the cost of goods purchased.

2. **Credit: Accounts Payable Account**
- To record the liability for the amount owed to the supplier.

**Journal Entry:**

- **Debit** Purchases Account
- **Credit** Accounts Payable Account

### Explanation:

- **Sale Transaction:** In a sale transaction, the company receives cash (or another form of payment) and records it as a debit to Cash (asset account) and credits Sales (revenue account) to recognize the income from the sale.

- **Purchase Transaction:** In a purchase transaction, the company acquires goods on credit and records it as a debit to Purchases (expense account) to recognize the cost of goods purchased, and credits Accounts Payable (liability account) to reflect the amount owed to the supplier.

These entries are fundamental in double-entry bookkeeping, ensuring that transactions are accurately recorded and financial statements reflect the company's financial position and performance. Adjustments may be necessary based on specific accounting practices or requirements of the business.

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