Topics
Introduction to Book-Keeping and Accountancy
- Accounting
- Book-Keeping
- Accountancy
- Book-Keeping vs. Accountancy
- Basis (Methods) of Accounting System
- Qualitative Characteristics of Accounting Information
- Basic Terms in Accounting
- Transaction
- Capital and Drawings
- Debtors, Creditors and Bad Debts
- Expenditure and Its Types
- Discount and Its Types
- Solvent Person vs. Insolvent Person
- Accounting Year
- Trading Concerns vs. Not for Profit Concerns
- Concept of Goodwill
- Fundamentals of Business Earnings
- Concepts of Assets, Liabilities and Net Worth
- Accounting Principles
- Accounting Concepts
- Core Accounting Concepts
- Accounting Standards
Meaning and Fundamentals of Double Entry Book-Keeping
Journal
- Accounting Documents
- Goods and Service Tax(GST)
- Types of Accounting Documents
- Voucher
- Tax Invoice (Under GST)
- Credit Memo
- Receipt
- Cheque
- Types of Cheques
- Books of Accounts
- Books of Accounts > Journal
- Journal Entries
- Journal Entries > Goods Account
- Journal Entries > Recording Discount in Journal
- Journal Entries > Other Important Journal Entries
Ledger
Subsidiary Books
- Concept of Subsidiary Books
- Cash Book
- Cash Book > Simple Cash Book (Single Column Cash Book)
- Cash Book > Two Column Cash Book (With Cash and Bank Columns)
- Cash Book > Petty Cash Book
- Simple Petty Cash Book
- Analytical Petty Cash Book
- Purchase Book
- Purchase Return Book
- Sales Book
- Sales Return Book
- Journal Proper
Bank Reconciliation Statement
- Accounting Documents Used in Banking
- Accounting Documents Used in Banking
- Pay-in-Slip
- Withdrawal Slip
- Bank Pass Book
- Bank Statement
- Bank Advice
- Concept of Virtual Banking
- Bank Reconciliation Statement(BRS)
- Cash Book vs Pass Book : Causes of Differences
- Time Difference(Regarding BRS)
- Errors and Omission Made by Bank or Businessman
- Formats of BRS
- Preparation of BRS
- Cash Book and Pass Book Comparison for Common Period
- Cash Book and Pass Book Balances for Different Periods
- Bank Balance as per Cash Book (Favourable / Debit Balance)
- Bank Balance as per Pass Book (Favourable / Credit Balance)
- Overdraft as per Cash Book (Unfavourable / Credit Balance)
- Overdraft as per Pass Book (Unfavourable/Debit balance)
- Reconciliation of Debtors and Creditors
Depreciation
Rectification of Errors
Final Accounts of a Proprietary Concern
Single Entry System
- Concept of Single Entry System
- Single Entry System vs. Double Entry System
- Parts of Single Entry System
- Statements of Affairs
- Statement of Profit or Loss
- Statement of Profit or Loss > Net Worth Method
- Practical Problems on Single Entry System
- Definition: Goods Account
- Accounts Related to Goods
- Journal Entries Related to Goods Account
- Examples
- Key Takeaways
Maharashtra State Board: Class 11
Definition : Goods Account
The Goods Account shows all activities related to buying, selling, returning, losing, or giving away goods that a business trades.
Maharashtra State Board: Class 11
Accounts Related to Goods
| Account | What It is Used For |
|---|---|
| Purchases Account | Records buying goods for business |
| Sales Account | Records selling goods to customers |
| Purchase Return | When goods bought are sent back to supplier |
| Sales Return | When sold goods are returned by customer |
| Drawings Account | When owner takes goods for home use |
| Free Samples | Business gives goods for promotion |
| Loss by Fire/Accident | Goods destroyed in fire/accident |
| Loss in Transit | Goods damaged/lost during transport |
| Loss by Theft | Goods stolen from business |
Possible Reasons for Purchase Return:
- Goods are not according to sample
- Goods are of low quality.
- Goods are damaged in transit
- Goods are defective.
- Goods are received in a greater quantity than ordered.
- Delay in supply of goods.
Maharashtra State Board: Class 11
Journal Entries Related to Goods Account
| Transaction | Account Debited | Account Credited | Narration |
|---|---|---|---|
| Cash Purchase | Purchases A/c | Cash A/c | Being purchased goods for cash |
| Credit Purchase | Purchases A/c | Supplier’s A/c | Being purchased goods on credit |
| Cash Sale | Cash A/c | Sales A/c | Being sold goods for cash to (supplier's name) |
| Credit Sale | Customer’s A/c | Sales A/c | Being sold goods on credit |
| Purchase Return (Return Outward) | Supplier’s A/c | Return Outward A/c OR Purchase Return A/c |
Being goods returned |
| Sales Return (Return Inward) | Return Inward A/c OR Sales Return A/c |
Customer’s A/c | Being sold goods returned by (customer's name) |
| Goods withdrawn for personal use | Drawings A/c | Goods withdrawn by Proprietor A/c OR Purchases A/c |
Being goods withdrawn by proprietor for personal use |
| Goods distributed as free samples | Advertisement A/c | Good distributed as free sample A/c OR Purchases A/c |
Being goods distributed as free sample |
| Uninsured goods destroyed by fire/accident | Loss by fire A/c |
Goods destroyed by fire A/c OR Purchases A/c |
Being goods destroyed by fire |
| Insured goods destroyed by fire AND The insurance company has admitted full claim (it has agreed to pay us entire loss amount) |
Insurance Co. A/c |
Goods destroyed by fire A/c OR Purchases A/c |
Being insurance claim accepted by the company |
| Insured goods destroyed by fire AND The insurance company has admitted the claim partly (it has agreed to pay us some of the loss amount) |
Insurance Co. A/c (Amt. of claim admitted) AND Loss by fire A/c (Amount of loss not covered by claim) |
Goods destroyed by fire A/c OR Purchases A/c |
Being goods destroyed, the insurance co. admitted the claim partly |
| Uninsured goods damaged/lost in transit | Loss in transit A/c | Goods lost in transit A/c OR Purchases A/c |
Being goods lost in transit |
| Insured goods damaged/lost in transit AND The insurance company has admitted full claim |
Insurance Co. A/c | Goods lost in transit A/c OR Purchases A/c |
Being goods lost |
| Insured goods damaged/lost in transit AND The insurance company has admitted claim partly |
Insurance Co. A/c (Amount of claim admitted) AND Loss in transit A/c (Amount of loss ont covered by claim) |
Goods lost in transit A/c OR Purchases A/c |
Being goods lost in transit and claim partly admitted |
| Goods stolen | Loss by theft A/c | Goods lost A/c OR Purchases A/c |
Being goods lost by theft |
Maharashtra State Board: Class 11
Examples
| Example (In Case of a Book Shop) | Journal Entry |
|---|---|
| Bought textbooks for cash from supplier | Purchases A/c Dr. 5,000 To Cash A/c 5,000 |
| Bought novels from C, the supplier; payment next month | Purchases A/c Dr. 12,000 To C’s A/c 12,000 |
| Sold comic books to customer for cash | Cash A/c Dr. 1,500 To Sales A/c 1,500 |
| Sold dictionaries on credit to school | School A/c Dr. 4,000 To Sales A/c 4,000 |
| Returned damaged books to supplier | Supplier’s A/c Dr. 2,000 To Purchase Return A/c 2,000 |
| B,a customer returned a set of encyclopedias | Sales Return A/c Dr. 800 To B’s A/c 800 |
| The owner takes novels home from shop’s stock | Drawings A/c Dr. 500 To Purchases A/c 500 |
| Giving free storybooks to attract customers | Advertisement A/c Dr. 1,000 To Purchases A/c 1,000 |
| Fire in shop destroys some reference books | Loss by Fire A/c Dr. 2,500 To Purchases A/c 2,500 |
| Bought books worth ₹3,000, lost on the way | Loss in Transit A/c Dr. 3,000 To Purchases A/c 3,000 |
| Some storybooks were stolen at night | Loss by Theft A/c Dr. 700 To Purchases A/c 700 |
| Insurance pays for lost books after fire incident | Insurance Co. A/c Dr. 2,500 To Purchases A/c 2,500 |
| Insurance pays ₹1,500 for burnt books worth ₹2,500. The shop bears the rest of the loss. | Insurance Co. A/c Dr. 1,500 Loss by Fire A/c Dr. 1,000 To Purchases A/c 2,500 |
Maharashtra State Board: Class 11
Key Takeaways
-
The Goods Account tracks all activities (buying, selling, returning, losing, distributing, withdrawing) related to items a business wants to sell for profit.
-
Goods are different from assets: Goods are traded by the business; assets are used in business operations and not meant for regular sale.
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Every transaction involving goods (purchases, sales, returns, losses, free samples, etc.) is recorded with a clear journal entry using debit and credit formats.
-
Returns are split into purchase returns (goods sent back to supplier) and sales returns (goods given back by customer).
-
Losses (like goods destroyed, stolen, lost in transit, or withdrawn by the owner) are tracked in specific accounts, which affect profit and help understand shop performance.
