Trade Payables and Trade Receivables 3E

Trade payable is a _________________

• Current asset

• Current liability

• Non-current asset

• Non-current liability

Trade payable has a debit balance. True or False.

• True

• False

Bought goods on credit. The double-entry is

• Dr Inventory

  Cr Trade payable

• Dr Inventory

  Cr Cash at Bank

• Dr Inventory

  Cr Cash in hand

• Dr Inventory

  Cr Sales Revenue

When a business sell goods on credit, the double-entry is

• Dr Sales revenue

  Cr Trade Payable

• Dr Sales Revenue

  Cr Trade Receivable

• Dr Trade Receivable

  Cr Sales Revenue

• Dr Trade Payable

  Cr Inventory

Goods returned to credit suppliers. The double-entry is

• Dr Inventory

  Cr Trade Payable

• Dr Trade Payable

  Cr Inventory

• Dr Sales Returns

  Cr Trade receivables

• Dr Trade receivables

  Cr Inventory

Paid a credit supplier a cheque for amount owing.

• Dr Trade Payable

  Cr Cash at Bank

• Dr Cash at Bank

  Cr Trade Payable

• Dr Trade Receivable

  Cr Cash at Bank

• Dr Cash at Bank

  Cr Trade Receivables

Trade discount is given to encourage regular patronage. True or False

• True

• False

The amount owing to a credit supplier amounted to $1 000. A 5% cash discount is given. How is this recorded in the books?

• Dr Discount allowed $50

  Cr Trade receivables $50

• Dr Discount Received $50

  Cr Trade payable $50

• Dr Trade receivables $50

  Cr Discount allowed $50

• Dr Trade payable $50

  Cr Discount received $50

Cash discount given to a credit customer is recorded as Discount Received. True or False.

• True

• False

Discount allowed

• reduces profit

• increases profit

• no effect on profit