Trade Payables

Chapter 12​

Trade payables​

Multiple Choice

Trade payables is the

• Amount owed to suppliers when businesses buy goods on credit.

• Amount owed to suppliers when businesses buy goods using cheque.

• Amount owed to suppliers when businesses buy goods and non-current assets on credit.

• Amount owed to suppliers when businesses buy non-current assets on credit.

Multiple Choice

Which is a non-accounting information to consider when choosing credit supplier?

• Return policy

• Trade discounts

• Cost of inventory

• Credit terms

Fill in the Blanks

State the accounting element for Trade Payable

Multiple Choice

When the business buys inventory / NCA on credit, what is the effect on Trade Payable?

• Decrease

  L-

• Increase

  L+

• No effect

Multiple Choice

When the business pays Trade Payables, state the effect on Trade Payable.

• Decrease

  L-

• Increase

  L+

• No effect

Multiple Choice

State the type of discount for discount allowed and discount received.

• Cash discount

• Trade discount

Multiple Choice

Is trade discount recorded in the ledger accounts?

• Yes

• No

Fill in the Blanks

John bought goods $3 640, list price, on credit from Heng Heng Supplies. John received 15% trade discount on the purchase.

What is the amount John owe Heng Heng?

Multiple Choice

State the journal entry to be recorded for a credit purchase of goods.

• Dr Inventory

  Cr Cash at Bank

• Dr Inventory

  Cr Trade payables

• Dr Trade payables

  Cr Inventory

Multiple Choice

What is the difference between the journal entries of a credit purchase of goods with or without trade discount?

• Amount

• 1 more entry for trade discount

• No difference

Fill in the Blanks

On 1 June 2021, Kelly returned goods at a list price of $500. Trade discount previously given was 10%.

What is the cost of inventory returned?

Multiple Choice

State the journal entry for payment of goods where a cash discount is received.

• Dr Trade payables

  Cr Cash at Bank

• Dr Trade payables

  Dr Discount allowed

  Cr Cash at Bank

• Dr Trade payables

  Cr Cash at Bank

  Cr Discount received

Multiple Choice

State the effect of discount received on profit for the period.

• Increase

• Decrease

• No effect

Multiple Choice

State the use of an invoice.

• Increases the amount owed by credit customers who were previously undercharged

• Informs credit customers of the amount owed after goods/services sold on credit

• Reduces the amount owed by credit customers due to: overcharging or returns of goods

• Acknowledges payment received from customers immediately after goods/services are sold/provided

Multiple Choice

Is the transaction on April 6

a capital expenditure or revenue expenditure?

• Capital Expenditure

  (+ Equipment)

• Revenue Expenditure

  (+Delivery and Installation expense)

Fill in the Blanks

State the ending balance for the ledger account.

Multiple Choice

What does Sep 1 balance b/d mean?

• The balance brought down from last month

• The business has a balance of $1200 in Best Sound account.

• The balance for Best Sound

• The business owed its credit supplier, Best Sound $1200.