FS Topic 4 Discounts, GST

When a business gives an Account Receivable a discount, the business records the discount as

• an expense

• revenue

Increases in Assets and Expenses will require a ______ entry in the financial records.

• negative

• positive

• credit

• debit

When an owner transfers a personal asset to the business, the asset is recorded in the General Journal at its

• original cost

• value when first purchased

• fair value

• value when the business will sell the asset

Before extending credit, a business checks the credit worthiness of the customer. This is done to minimise

• the amount of work for the accountant

• the amount recorded for the Account Receivable

• the amount of bad debts

• the amount of time talking to the customer

Credit terms expressed as 5/7, n30 means

• a 7% discount if paid within 5 days, otherwise full amount in 30 days

• a 5% discount if paid within 7 days, otherwise full amount in 30 days

• a 7% discount if paid within 5 days, otherwise full amount in 35 days

• a 5% discount if paid within 7 days, otherwise full amount in 37 days

True or False? When recording the payment received from the Account Receivable, the discount is not applied to the GST amount owed.

• True

• False

Expenses are

• increases in assets or decreases in liabilities that result in an increase in owner's equity...

• increases in assets and liabilities that result in a decrease in owner's equity..

• decreases in assets and liabilities that result in an increase in owner's equity..

• decreases in assets or increases in liabilities that result in a decrease in onwer's equity....

Thinking of the Accounting Equation, a payment to an Accounts Payable will

• increase Assets & decrease Liabilities

• increase Assets & increase Liabilities

• decrease assets & increase liabilities

• decrease assets & decrease liabilities

Revenues are

• increases in Assets & decreases in Liabilities that result in a decrease in owner's equity...

• increases in Assets & decreases in Liabilities that result in an increase in owner's equity..

• decreases in Assets & decreases in Liabilities that result in a decrease in owner's equity

• increases in Assets & increases in Liabilities that result in a decrease in owner's equity

Discount revenue is

• an increase in an asset

• is a decrease in a liability