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Las #5 Fabm2

The document discusses key terms from the Statement of Comprehensive Income such as sales, contra revenue including sales returns and discounts, and purchases. It notes that contra revenue is called contra because it is on the opposite side of the sales account. The document also provides an activity that defines and explains the different accounting terms.

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Clarisse Paola Espera
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37 views

Las #5 Fabm2

The document discusses key terms from the Statement of Comprehensive Income such as sales, contra revenue including sales returns and discounts, and purchases. It notes that contra revenue is called contra because it is on the opposite side of the sales account. The document also provides an activity that defines and explains the different accounting terms.

Uploaded by

Clarisse Paola Espera
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Colegio de San Gabriel Arcangel, Inc.

PACUCOA Accredited – Level 1 Status


SENIOR HIGH SCHOOL DEPARTMENT
City of San Jose del Monte, Bulacan

LEARNING ACTIVITY 5

Activity Title : Statement of Comprehensive Income


Learning Target : I can define the different account terms in the Statement of Comprehensive Income
References : Fundamentals of Accountancy, Business, and Management 2

Discussion:

Sales- is the total amount of revenue that the company was able to generate from selling products.
Contra revenue- called contra because it is on the opposite side of the sales account. The sales account is on the credit
side while the reduction to sales accounts are on the debit side. This is contrary to the normal balance of the sales or
revenue accounts. There are two types of contra revenue namely the sales return and sales discount.
Sales Returns are debited in order to record returns of customers or allowances for such returns. This occur
when customers return their products for reasons such as but not limited to defects or change.
Sales Discounts are discounts given to customers who pay early and is recorded. It is also known as cash
discount. This is different from trade discounts which are given when customers buy in bulk while sales
discount is awarded to customers who pay earlier or before the deadline.
Purchases are amount of goods bought during the current accounting period.
Contra Purchases are account that is credited being contrary to the normal balance of purchase account

Activity:
1. How can you describe sales?
2. Why is contra revenue called as contra?
3. Define purchases.
4. Explain the difference between sales discounts and trade discount.
5. What is the effect of sales return?
Answers:
1. Sales is the total amount of revenue that the company was able to generate from selling products.
Colegio de San Gabriel Arcangel, Inc.
PACUCOA Accredited – Level 1 Status
SENIOR HIGH SCHOOL DEPARTMENT
City of San Jose del Monte, Bulacan

2. It called contra because it is on the opposite side of the sales account.


3. Purchases are amount of goods bought during the current accounting period.
4. Trade discount is the reduction in price from the list of goods allowed by manufacturer or wholesaler to
a retailer. While the sales discount, it may be offered when the seller is short of cash, or if it wants to
reduce the recorded amount of its receivables outstanding for other reasons.
5. The effect of sales returns, when the goods are returned the asset of inventory increases. It reduces the
value of sales and at the end of accounting period, it will also reduce the sales credited to the income
statement.

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