Table of Contents
Rules for deciding Whether A Transaction is Cash or Credit
In all business concerns cash transactions are numerous. Cash transactions may take place in the following two ways:
- By Cash
- By Cheque
A transaction is regard as a Cash Transaction if:-
- The word “Cash or Cheque (Bank)” is mentioned in the transaction. Even buyer and seller or owner name given in transactions.
For example:-
- Bought goods for cash Rs. 100 from A&Co.
- Purchased Furniture from B&Co for Cash.
- Cash sales to Farooq Rs. 4,000
- Paid Cash to Bata Company Rs. 7,000
- Withdraw cash from business for personal use Rs. 3,000
- Purchased second had duplicating machine for cash Rs. 5,00,000 from Toyota Company.
- A Withdraw cash from bank for business use Rs. 6,000.
- B Deposited cash into Habib Bank Limited Rs. 40,000.
- Saad Started Business with Cash Rs. 4,000.
- Withdrew cash for the payment of tuition fee of owner’s children.
- Received a Cheque from A&Co Rs. 3,000.
- Received cash in full settlemt from khalid and sent the cash into bank Rs. 6,000.
Important Note:-
When received a cheque, consider as a cash until deposit into bank. if received a cheque and deposit into bank same day then not consider as cash.
- The name of the “Seller or Buyer” is not mentioned in the transaction.
For example:-
- Bought goods Rs. 100.
- Borrowed from Bank Rs. 10,000
- Open a current Account with HBL and deposited cash therein Rs. 4,500.
- Sold goods Rs. 200
- Goods purchased by cheque Rs. 5,000
- Paid Salaries Rs. 500
- Received commission Rs. 700
- Machinery purchased Rs. 67,000
- Paid rent Rs. 1,000 for the building in which business is situated.
- Paid Insurance Rs. 4,000
- Received Interest Rs. 3,500
- Paid Travelling expense Rs. 700
- Furniture sold Rs. 5,000.
- Purchase goods and paid by cheque Rs.1,000.
- Sold goods and received cheque Rs. 3,000.
- Insurance premium paid by cheque Rs. 5,00.
- Issue a cheque against land is purchased Rs. 30,000.
- Received cheque for sale of old machinery and banked Rs. 4,000.
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A transaction is regard as a Credit Transaction if:-
- The word “On Credit or On Account” is mentioned in the transaction.
For example
- Bought goods on Credit Rs. 100 from Ansar.
- Sold goods on credit to Munir worth Rs. 10,000.
- Machinery purchase on Account from Sarwar & Co. Rs. 1,00,000.
- Purchased goods on account from Noor Mills Limited Rs. 4,500
- Sold building to Karachi stores worth Rs. 20,000 on credit basis.
- The name of the “Seller or Buyer” is mentioned in the transaction and the word “Cash or Cheque (Bank)” is not mentioned in the transaction.
For example
- Bought goods Rs. 100 from ali.
- Purchased motor vehicle from saleem auto Rs. 70,000.
- Purchased goods from Babar Rs. 3,000.
- Purchased typewriter from Muzzamal Rs. 4,000.
- Bought Shoes from Bata Company Rs. 7,000
- Purchased second had duplicating machine Rs. 5,00,000 from Toyota Company.
- Sold Plant to Noor Mills Rs. 60,000.