Tally ERP 9 Course | Chapter - 2 Basic Accounting Terms Part 2

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11) Purchases :- This term is used for purchase of goods
for resale.
i) There are two types of purchase

a) Cash Purchases :- Goods purchased for cash
are termed as Cash Purchases.

b) Credit Purchases :- goods purchased on credit
are termed as Credit Purchases.

12) Sales :- The term is used for sale of goods that are
dealt with by the firm.
i) There are two types of sales
a) Cash Sales :-When goods are sold for cash,
they are termed as Cash Sales.
b) Credit Sales :- When goods are sold on credit,
they are termed as Credit Sales.

13) Purchases Return :- Goods purchased may be
returned due to any reason, say, they are not as
per specifications or are defective. Goods returned
are known as Purchases Return or Returns Outward.

14) Sales Return:- Goods sold when returned by the
purchaser are termed as Sales Return on Returns
Inward.
15) Stock :- Stock is the tangible asset held by an
enterprise for the purpose of sale in the ordinary
course of business.
i) There are two types of stock
a) Opening stock :- Opening Stock is the stock-inhand in the beginning of the accounting year.
b) Closing Stock :- Closing Stock is the stock-inhand at the end of the accounting period.

16) Trade Receivable :- It is the amount receivable for
the sale of goods in ordinary course of business.
i) There are two Classifications.
a) Debtor :- A person who owes amount to the
enterprise on account of credit sales of goods or
services is called a Debtor. For example, when
goods are sold to a person on credit that person
is called a Debtor because he owes the amount
to the enterprise. The amount due is known as
debt.
b) Bill Receivable :- Bill Receivable means a Bill of
Exchange accepted by a debtor, the amount of
which will be received on the specified date.

17) Trade Payable :- It is the amount payable for
purchase of goods or services in ordinary course of
business.
i) There are two Classifications.
a) Creditor :- A person to whom an enterprise
owes amount on account of credit purchases of
goods or services is called a Creditor. For
example, Mohan is a Creditor of a firm when
goods are purchased on credit from him.
b) Bill Payable :- Bill Payable means a Bill of
Exchange, the amount of which will be payable
on the specified date.

18) Goods :- Goods are the physical items of trade. It is
a term that applies to all the items making up the
sales or purchases of a business.

19) Cost of Goods Sold :- The direct cost attributable to
the production of goods and services.

20) Book Value :- The amount at which an item
appears in the books of account.
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