Question

what do you understand by "sales and collection" ? state any five classes of transactions for this.

Answer 1

Answer :

Sales and Collection :

The nature of the accounts may vary, of course, depending on the industry and client involved. Thereare differences in the nature and account titles for a service industry, a retail company, and aninsurance company, but the key concepts remain the same. To provide a frame of reference forunderstanding the material in this chapter, let’s assume we’re dealing with a wholesale merchandising company.

The five classes of transactions in the sales and collection cycle includes the following:

1.Sales (cash and sales on account) ;

2.Cash receipts ;

3.Sales returns and allowances ;

4.Write-off of uncollectible accounts ;

5.Estimate of bad debt expense .

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