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can any one explain me why the following transactions are cash and credit? it is very confusing.
a) Receipt of goods worth $140.59 from a supplier together with an invoice for that amount.
b)Payment of $278.50 by cheque for a purchase at the till.Actually i know the transaction name, but i want to know the reason why it is not the other case. It will be appreciated if queries are replied elaborately. thanks in advance.
In (a) it says that you have received the goods together with an invoice. There is no mention of having paid any cash, and the fact that the goods simply arrived together with an invoice implies that you have not yet paid for them – the invoice is telling you the amount that you have to pay, but until you do pay then you owe money. i.e. you have bought them on credit.
In (b) is days that you paid by cheque for a purchase at the till. Paying by cheque is effectively the same as paying cash, and if you bought and paid for them at the till (i.e. at the counter) then it is a cash purchase – you paid immediately and therefore you do not still owe money (and therefore they were not bought on credit).
If you buy on credit then you are taking the goods now but paying for them later.
If you buy for cash then you are taking the goods now and paying for them now.
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