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2.2 Double Entry Book Keeping—ISC XI
4. Trade Debtor. A person or entity who owes amount to the business against credit sale of goods
and/or services.
Trade Debtor is a person or entity who owes amount to the enterprise on account of credit
sale of goods and/or services. Stating differently, Trade Debtor is a person or entity to whom
goods and/or services are sold on credit.
5. Trade Creditor. A person or entity to whom amount is owed against credit purchase of goods
and/or services.
Trade Creditor is a person or entity to whom the enterprise owes an amount for credit
purchase of goods and/or services. Stating differently, Trade Creditor is a person or entity
from whom goods and/or services are purchased on credit.
6. Purchases. It is purchase of goods to be sold in the ordinary course of business.
The term ‘Purchases’ means purchase of goods for resale or for manufacture of goods,
i.e., raw material. The term ‘Purchases’ includes both cash and credit purchase. Goods
purchased against cash are called cash purchases while goods purchased on credit, i.e., to
be paid at a later date, are called credit purchases.
Purchases Return. It is return of goods purchased for resale.
Goods purchased may be returned due to any reason, say, they are not as per specifications
or are defective. Goods returned are known as Purchases Return or Returns Outward.
7. Sales. It is sale of goods in the ordinary course of business.
The term ‘Sales’ means sale of goods dealt in by the enterprise. The term ‘Sales’ includes
both cash and credit sales. When goods are sold against cash, they are known as cash sales
but if goods are sold and payment is to be received at a later date, it is known as credit sales.

Sales Return. It is return of goods sold.
Goods sold when returned by the purchaser are termed as Sales Return or Returns Inward.
8. Assets. Economic resources of the entity which give cash or benefit in future.
Assets are property or legal rights owned by an entity to which money value can be attached.
In other words, anything which will enable the entity to get cash or benefit in the future
is an asset. Money owed by debtors, stock of goods, cash, furniture, machines, building,
patents, etc., are some examples of assets.
Assets can be classified as:
(i) Fixed Assets. Assets owned by the entity or enterprise which are not for resale.
Fixed Assets are the assets held by an enterprise not for sale but with the purpose to
increase the earning capacity of the business. Fixed assets are further classified into
Tangible Fixed Assets and Intangible Fixed Assets.
(a) Tangible Fixed Assets. Tangible Fixed Assets have physical existence, i.e., they can
be seen and touched. Examples of tangible fixed assets are land, building, plant
and machinery, computer, etc.
(b) Intangible Fixed Assets. Intangible Fixed Assets do not have physical existence, i.e.,
they cannot be seen and touched. Examples of intangible fixed assets are goodwill,
trademarks, patents, computer softwares, etc.