cash and credit transactions
TRANSCRIPT
Cash and Credit TransactionsSection 3 objective 2
Cash and Credit transactions– Distinguish between cash and
credit transactions• The use of• Cash• Cheques• Debit & credit cards
1. by Cash - the customer pays right away by cash or cheque
2. on Credit - the customer pays later
Cash and Credit transactionsThere are two ways to sell or purchase
goods:
• Cash transactions– Can be identified
by • The use of words
– Payments by…– Collection of
cash or cheques
Cash and Credit transactions• Posting of cash
transactions to Books of original entry– entered in:
• Cash book • Petty cash book• General journal
Cash and Credit transactions
• Credit transactions– Is on credit if the following applies:
• If it was described as the transaction took place on credit
• The name of the supplier or customer was mentioned
• If neither the words cash nor bank was mentioned
Cash and Credit transactions
• Posting of credit transactions to Books of original entry– entered in:
• Purchases journal• Sales journal• Returns outwards journal
(purchases returns journal)• Sales inwards journal (sales
returns journal)• General journal
Cash and Credit transactions
• The use of cash :– Used for frequent small
transactions such as• Paying day to day
expenses• Collections for
services rendered• Balance paid or
received for outstanding balances
Cash and Credit transactions
• The use of cheques:– Used as a security measure for
not carrying large sums of cash. Examples of usage of cheques are• Payment of cheques for
credit transactions• Payment of expenses such
as salaries and wages to employees
• Collections of cheques for credit transactions
Cash and Credit transactions
• The use of credit cards:
• Payment of cheques for credit transactions
• Payment of expenses such as salaries and wages to employees
• Collections of cheques for credit transactions
• Making a purchase online or to a major retailer
• For building credit
Cash and Credit transactions
• The use of debit cards :– Limits spending.
Cannot use card if there is insufficient funds in the account
– Useful for point of sale for making purchases or payment of bills (for cash or on credit)
– Making payment online
Cash and Credit transactions
Cash and Credit transactions