Accounts Payable & Accounts Receivable

What is the classification of Accounts Payable as an accounting element?

• Current liability

• Current asset

• Revenue

• Expense

What is the classification of Accounts Receivable as an accounting element?

• Current liability

• Current asset

• Revenue

• Expense

A credit purchase of inventory made by the business will increase the balance of _____________

• Accounts Payable

• Accounts Receivable

• Bank

• Revenue

Payments to Accounts Payable will ________ the balance of Accounst Payable

• increase

• decrease

_____________ is a subsidiary Accounting record that records each individual transaction with each individual Account Payable, and shows the balance owing to that Account Payable at any point in time.

• Accounts Payable Record

• Accounts Receivable Record

• Accounts Payable Schedule

• Accounts Receivable Schedule

Credit terms 7/10, n/30

What does the 7/10 mean?

• If the business pays within 10 days, they can receive 7% discount.

• If the business pays within 7 days, they can receive 10% discount.

• If the business pays back full amount, they can receive 7% discount.

• The business needs to be pay back in 7 days.

A credit purchase transaction can be verified by ______

• Invoice

• Receipt

• EFT Receipt

What is the name of this subsidiary record for Accounts Payable?

• Accounts Payable Schedule

• Accounts Payable Record

What is the effect of a purchase return on the accounting equation?

• Assets decrease, Liabilities decrease, no effect on owner's equity

• Assets increase, Liabilities decrease, no effect on owner's equity

• Assets decrease, Liabilities increase, no effect on owner's equity

• Assets decrease, Liabilities decrease, owner's equity increase

If the business pays back early to the supplier (Accounts payable), the business may receive discount on the payment. From the business's perspective, the discount is recognised as __________.

• Discount revenue

• Discount expense