Al-ameen 2nd term exam acc.

Which of the following accounts would a company debit when a cash discount is granted?

• Discount Received

• Cash

• Discount Allowed

• Sales revenue

Which of the following is not a valid reason for offering a trade discount?

• To encourage bulk purchases

• To reward loyal customers

• To increase profit margins

• To make prices more attractive to retailers

What is the effect of a cash discount on the seller’s accounting records?

• Increases revenue

• Reduces accounts receivable

• Increases expenses

• Increases liabilities

An account in the real ledger is

• Sales account

• Insurance account

• discount received account

• Machinery account

Errors in the trial balance are corrected using the

• Control account

• Cash book

• Ledger

• Journal

The owner's claim on the asset of a business is

• Capital

• Loan

• Liabilities

• Drawings

Liquid assets refer to

• A cash and other assets that can be easily converted into cash

• Cash and other current assets

• Current assets less current liabilities

• Bank balance less overdraft

How is a discount recorded in the books of accounts?

• As revenue

• As an expense

• As a reduction in revenue

• As a liability

Which of the following is a characteristic of a cash discount?

• Given for purchasing in bulk

• Given for early payment

• A permanent reduction in price

• Given as a special offer

One of the columns in a single column cash book is

• Bank

• Discount allowed

• Discount received

• Particulars