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10 Trade receivable and trade payable
This accounting quiz focuses on credit transactions, trade and cash discounts, journal entries, and financial statement classification. It covers topics like credit notes, recording purchases and sales, discounts, returns to suppliers, profit impact, classification of liabilities, and entries in accounts for different scenarios. It’s designed for student revision.
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What document will a business receive when they purchase goods or non-current assets on credit?
A) Credit note
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Add RecommendationAdd TagsView All Assigned TagsB) Debit note
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Add RecommendationAdd TagsView All Assigned TagsC) Invoice
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Add RecommendationAdd TagsView All Assigned TagsD) Receipt
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What are the correct journal entries to record a credit purchase of goods at a list price of $600 less a trade discount of 15%?
A) DR Inventory $510; CR Trade payable $510
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Add RecommendationAdd TagsView All Assigned TagsB) DR Inventory $510 DR Trade discount $90; CR Trade payable $600
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Add RecommendationAdd TagsView All Assigned TagsC) DR Inventory $600; CR Discount received $90 CR Trade payable $510
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Add RecommendationAdd TagsView All Assigned TagsD) DR Inventory $600 Dr Discount allowed $90; CR Trade payable $510
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A) To increase profits
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Add RecommendationAdd TagsView All Assigned TagsB) To encourage late payments
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Add RecommendationAdd TagsView All Assigned TagsC) To encourage early payments
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Add RecommendationAdd TagsView All Assigned TagsD) To discourage payments
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What are the journal entries when a business returns goods to its credit supplier due to wrong specification?
A) DR Inventory; CR Trade payables
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Add RecommendationAdd TagsView All Assigned TagsB) DR Trade payable; CR Inventory
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Add RecommendationAdd TagsView All Assigned TagsC) DR Cash at bank; CR Inventory
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Add RecommendationAdd TagsView All Assigned TagsD) DR Sales revenue; CR Trade payables
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How does a business receiving a cash discount from its supplier affect the profit for the period?
A) Increases profit
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Add RecommendationAdd TagsView All Assigned TagsB) Decreases profit
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Add RecommendationAdd TagsView All Assigned TagsC) No impact on profit
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Add RecommendationAdd TagsView All Assigned TagsD) Increases revenue
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If a business settles an amount owing of $1,000 to its credit supplier by issuing a cheque for $990, what does this imply?
A) Business incurred a loss
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Add RecommendationAdd TagsView All Assigned TagsB) Business received a discount
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Add RecommendationAdd TagsView All Assigned TagsC) Business overpaid
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Add RecommendationAdd TagsView All Assigned TagsD) Business made an error
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How are amounts owing to credit suppliers classified in the statement of financial position?
A) Current assets
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Add RecommendationAdd TagsView All Assigned TagsB) Non-current liabilities
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Add RecommendationAdd TagsView All Assigned TagsC) Current liabilities
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Add RecommendationAdd TagsView All Assigned TagsD) Shareholders’ equity
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A) Credit side of the Trade Receivable account
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Add RecommendationAdd TagsView All Assigned TagsB) Debit side of the Trade Receivable account
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Add RecommendationAdd TagsView All Assigned TagsC) Credit side of the Trade Payable account
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Add RecommendationAdd TagsView All Assigned TagsD) Debit side of the Trade Payable account
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What are the correct journal entries to record a credit sale of goods at a list price of $800 with a trade discount of 20%?
A) DR Trade Receivable $640; CR Sales revenue $640
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Add RecommendationAdd TagsView All Assigned TagsB) DR Trade Receivable $640 DR Discount Allowed $160; CR Sales revenue $800
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Add RecommendationAdd TagsView All Assigned TagsC) DR Trade Receivable $800; CR Discount Received $160; CR Sales revenue $640
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Add RecommendationAdd TagsView All Assigned TagsD) DR Trade Receivable $640; CR Discount Received $160; CR Sales revenue $800
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A) amounts paid to credit suppliers
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Add RecommendationAdd TagsView All Assigned TagsB) goods returned to credit suppliers
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Add RecommendationAdd TagsView All Assigned TagsC) discount received from credit suppliers
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Add RecommendationAdd TagsView All Assigned TagsD) interest charged on late payment
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A) discount allowed
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Add RecommendationAdd TagsView All Assigned TagsB) dishonoured cheque from customer
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Add RecommendationAdd TagsView All Assigned TagsC) allowance for impairment of trade receivables
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Add RecommendationAdd TagsView All Assigned TagsD) sales returns
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Which of the following is the correct location for recording the allowance for impairment of trade receivable?
A) on the credit side of the trade payable ledger account
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Add RecommendationAdd TagsView All Assigned TagsB) on the credit side of the trade receivable ledger account
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Add RecommendationAdd TagsView All Assigned TagsC) on the debit side of the trade payable ledger account
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Add RecommendationAdd TagsView All Assigned TagsD) on the debit side of the trade receivable ledger account
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A) Discount allowed appears on the credit side.
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Add RecommendationAdd TagsView All Assigned TagsB) Discount allowed appears on the debit side.
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Add RecommendationAdd TagsView All Assigned TagsC) Discount received appears on the credit side.
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Add RecommendationAdd TagsView All Assigned TagsD) Discount received appears on the debit side.
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On 1 October 2025 Padilla Industries owed Nonsense Trading $40 000. During the month, the company made credit purchases totalling $33 000. The business also made payments by cheque of $48 000. On 31 October 2025 the balance owed by Padilla Industries to Nonsense Trading is
A) $25 000
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Add RecommendationAdd TagsView All Assigned TagsB) $41 000
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Add RecommendationAdd TagsView All Assigned TagsC) $55 000
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Add RecommendationAdd TagsView All Assigned TagsD) $121 000
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Students who fail may benefit from reviewing the concepts of credit transactions, trade and cash discounts, journal entries, and financial statement classification in more detail.
Keep practicing and seek additional help from your instructor or online resources to strengthen your understanding of the topics covered in the quiz.
Suggestions for Improvement:
– Focus on grasping the fundamental principles of accounting.
– Practice more exercises to enhance comprehension and application skills.
Keep practicing and seek additional help from your instructor or online resources to strengthen your understanding of the topics covered in the quiz.
Suggestions for Improvement:
– Focus on grasping the fundamental principles of accounting.
– Practice more exercises to enhance comprehension and application skills.
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