Study questions platform-wide or filter by specific tests with correct answers revealed.
A trader calculates trade receivables turnover as: (Trade Receivables ÷ Denominator) × 365. What is the denominator?
Option B (Credit sales) is correct.
Trade receivables arise from credit sales. The formula is:
Trade Receivables Days = (Trade Receivables ÷ Credit Sales) × 365
Credit purchases relate to trade payables, not receivables.
A company's bank reconciliation shows:
| Cash book balance (31 Dec) | $2,075 debit |
| Bank statement balance (31 Dec) | $2,250 credit |
| Bank charges not in cash book | $150 |
| Outstanding cheques | $325 |
What bank balance should be reported in the financial statements?
The financial statements show the updated cash book balance. Updated Cash Book = Draft Cash Book ($2,075) - Bank Charges ($150) = $1,925. Note that outstanding cheques are used to reconcile the bank statement to the cash book, not the other way around.
Sign in to join the conversation and share your thoughts.
Log In to Comment