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10 Trade receivable and trade payable
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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?
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A) Credit note
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B) Debit note
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C) Invoice
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D) 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%?
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A) DR Inventory $510; CR Trade payable $510
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B) DR Inventory $510 DR Trade discount $90; CR Trade payable $600
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C) DR Inventory $600; CR Discount received $90 CR Trade payable $510
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D) DR Inventory $600 Dr Discount allowed $90; CR Trade payable $510
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A) To increase profits
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B) To encourage late payments
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C) To encourage early payments
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D) 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?
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A) DR Inventory; CR Trade payables
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B) DR Trade payable; CR Inventory
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C) DR Cash at bank; CR Inventory
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D) 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?
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A) Increases profit
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B) Decreases profit
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C) No impact on profit
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D) 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?
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A) Business incurred a loss
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B) Business received a discount
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C) Business overpaid
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D) Business made an error
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How are amounts owing to credit suppliers classified in the statement of financial position?
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A) Current assets
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B) Non-current liabilities
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C) Current liabilities
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D) Shareholders’ equity
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A) Credit side of the Trade Receivable account
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B) Debit side of the Trade Receivable account
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C) Credit side of the Trade Payable account
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D) 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%?
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A) DR Trade Receivable $640; CR Sales revenue $640
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B) DR Trade Receivable $640 DR Discount Allowed $160; CR Sales revenue $800
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C) DR Trade Receivable $800; CR Discount Received $160; CR Sales revenue $640
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D) 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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B) goods returned to credit suppliers
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C) discount received from credit suppliers
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D) interest charged on late payment
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A) discount allowed
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B) dishonoured cheque from customer
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C) allowance for impairment of trade receivables
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D) sales returns
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Which of the following is the correct location for recording the allowance for impairment of trade receivable?
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A) on the credit side of the trade payable ledger account
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B) on the credit side of the trade receivable ledger account
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C) on the debit side of the trade payable ledger account
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D) 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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B) Discount allowed appears on the debit side.
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C) Discount received appears on the credit side.
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D) 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
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A) $25 000
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B) $41 000
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C) $55 000
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D) $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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