What type of accounts are these considered at AAT level 2: Purchases and sales-return accounts?

Soliloquy
Soliloquy Registered Posts: 2 New contributor ?
They appear to be the 'opposite" of an expense and income account respectively.
Thanks.

Comments

  • anony123
    anony123 Registered Posts: 339 Dedicated contributor ? ? ?
    They are both expenses. Purchases would be e under DEAD CLIC. The sales would normally be an increase to the income account, however these are being returned so the sales account would be decreasing and it would be a debit straight away. If you are asking something else, just say.
    wilburnetSoliloquy
  • anony123
    anony123 Registered Posts: 339 Dedicated contributor ? ? ?
    I do not think that it can be classed as an expense, but it would be a loss for the ocmpany.
    Soliloquy
  • Soliloquy
    Soliloquy Registered Posts: 2 New contributor ?
    anony123 said:

    They are both expenses. Purchases would be e under DEAD CLIC. The sales would normally be an increase to the income account, however these are being returned so the sales account would be decreasing and it would be a debit straight away. If you are asking something else, just say.

    Thanks, I meant purchase return though. Sure, I get that sales is an income and purchases are an expense, its just that in the book, purchase returns and sales returns have at times had their own general ledger entry, rather than just checking the other side of the sales/return ledger.

    As they had their own ledger, their accounts must be classified as something. It seeems strange classifying a purchase return account as a form of income though.
  • anony123
    anony123 Registered Posts: 339 Dedicated contributor ? ? ?
    Well its not really. When you purchase something for the business that would be an expense, as it is coming out of the businesses money. However, when you make a return back to the business you are giving the money back so I supposed it could be an income really. Why you asking this, do you need help with a certain question?
  • aatwizard
    aatwizard Registered Posts: 1 New contributor ?
    Purchases are an expense, sales returns are a decrease of income (sales). There are a few accounts classified in the same manner, within each statement. If you look at SPL, you'll see that you have only two choices - either expenses or income. All transactions are going to be resulting in a decrease or an increase of either type of account (for L2!!! - In L3 we emphasize the fact that there are 2 accounts within SPL that can behave either as income or as expense, depending on the transaction they are documenting).
  • anony123
    anony123 Registered Posts: 339 Dedicated contributor ? ? ?
    Level 2 is nothing compared to Level 3. Level 3 is harder but more fun.
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