QUESTION 1: Briefly define the following terms used in accounting, in no more than 2 sentences:
1.1 Trade payables or creditors: These terms refer to the amount of money a business owes to its suppliers or vendors for goods or services received on credit.
1.2 Purchases: Purchases in accounting refer to the acquisition of goods or services by a business for the purpose of resale or use in its operations.
1.3 Credit customers of a business: Credit customers are individuals or entities who have purchased goods or services from a business on credit, meaning they have not yet paid for the items received.
1.4 Journal in which all credit sales are recorded: This refers to a specific accounting record, often called the sales journal, where all credit sales made by a business are recorded for tracking and reporting purposes.
QUESTION 3: Define the following accounting terms:
3.1 FOB shipping point: FOB shipping point is a term used in accounting to indicate that the buyer assumes ownership and responsibility for goods as soon as they are shipped from the seller's location.
3.2 FOB destination point: FOB destination point is a term used in accounting to indicate that the seller retains ownership and responsibility for goods until they reach the buyer's specified destination.
3.3 Depreciation: Depreciation is an accounting method used to allocate the cost of an asset over its useful life, reflecting the gradual decrease in value or usefulness of the asset over time.
3.4 Depreciation Date: Depreciation date refers to the specific date on which the depreciation of an asset begins, typically the date the asset is put into service or starts generating revenue for the business.
3.5 Residual Value: Residual value, also known as salvage value, is the estimated value of an asset at the end of its useful life. It represents the amount the business expects to receive from selling or disposing of the asset after depreciation.
3.6 Carry Value/Book Value: Carry value or book value is the value of an asset as recorded on the company's balance sheet. It is calculated by subtracting accumulated depreciation from the original cost of the asset and represents the net value of the asset at a specific point in time.