Chapter 8 : Cash

A Credit (Cr) balance in a Cash at Bank account represent a ______________ balance.

• Positive

• Negative

Which of the following is NOT a reason for a dishonoured cheque?

• Post dated cheque

• Information on cheque is not consistent

• Information on cheque is not complete

• Insufficient amount in payee's bank account

• None of the above

A trade discount is given encourage prompt or earlier payments by trade receivables. True or false?

• True

• False

Discount ___________ are given by the business to its trade receivables to encourage early or prompt payment. True or false?

• received

• allowed

Discount received is under the accounting element of _________________.

• Asset

• Liability

• Equity

• Income

• Expense

A business sold backpacks to a credit customer, at a list price of $1000, less trade discount of 10%. Which of the following double entries is correct?

• Dr Cash at bank 900

  Dr Discount allowed 100

  Cr Sales revenue 1000

• Dr Trade receivable 900

  Dr Sales revenue 900

• Dr Inventory 900

  Cr Trade payable 900

• Dr Cash at bank 900

  Dr Discount allowed 100

  Cr Trade receivable 1000

A business received a $600 cheque from Johnson in full settlement of the $750 owing to the business. Is the discount of $150 a trade or cash discount?

• Trade discount

• Cash discount

A business received a $600 cheque from Johnson in full settlement of the $750 owing to the business. Which of the following is the correct double entry?

• Dr Cash at bank 750

  Cr Sales revenue 750

• Dr Cash at bank 600

  Dr Discount received 150

  Cr Trade receivable 750

• Dr Trade receivable 750

  Cr Sales revenue 750

• Dr Cash at bank 600

  Dr Discount allowed 150

  Cr Trade receivable 750