Study questions platform-wide or filter by specific tests with correct answers revealed.
Which documents help verify the existence of a sales transaction?
- Delivery note
- Price quotation
- Sales invoice
- Sales order
Option B (1 and 3) is correct.
- A delivery note confirms goods were physically delivered.
- A sales invoice is the formal document requesting payment.
A price quotation (2) precedes the sale. A sales order (4) is raised by the customer but does not confirm completion.
A firm maintains an allowance for doubtful debts at 5% of trade receivables. This year, trade receivables were $8,000, which represented a 20% decrease from the previous year. How will this change affect the current year's profit?
1. Current Receivables = $8,000. Current Allowance = $8,000 $\times$ 5% = $400.
2. Last Year Receivables = $8,000 / 0.80 = $10,000. Last Year Allowance = $10,000 $\times$ 5% = $500.
3. Change = $500 - $400 = $100 reduction in allowance.
A reduction in allowance is credited to the income statement, thus increasing profit by $100.
Sign in to join the conversation and share your thoughts.
Log In to Comment