11 markmedium
A trader purchases goods with a list price of $600. He receives a trade discount of 20% and a cash discount of 5%. What amount should be entered in the purchases account?
Choose your answer
$600
$570
$480
$456
Accounting
32 questions · 91 marks · ≈ 2 hours
A trader purchases goods with a list price of $600. He receives a trade discount of 20% and a cash discount of 5%. What amount should be entered in the purchases account?
Choose your answer
$600
$570
$480
$456
State the source document for each transaction.
| Transaction | Source document |
|---|---|
| Returned goods to a credit supplier | |
| Purchased refreshments for office | |
| Received bank interest | |
| Purchased non-current asset on credit | |
| Issued cheque for personal use |
Identify the reason for offering a cash discount.
Choose your answer
To encourage bulk buying
To encourage prompt payment
To gain new customers
To reward loyalty
Complete the document.
| Credit note Crew Warehouse Western Road Glasgow G3 9AB | |||
|---|---|---|---|
| KP Wholesalers Elland Road Leeds LS1 1BB | No: 1816 | ||
| Date: 12 April 2023 | |||
| Description | Quantity | Unit cost $** | Total cost $ |
| Lights | 60 | 37.40 | |
| Tyres | 85 | 41.20 | |
| Subtotal | |||
| Trade discount 20% | |||
| Total |
On 30 September 2023 Roberto received the following document.
| Williams Barlow Street Manchester M60 3YY Roberto Sesame Street Leeds LS3 3BB Date: 30 September 2023 | ||||
|---|---|---|---|---|
| Date Sept 2023 | Reference | Debit $ | Credit $ | Balance $ |
| 1 | Balance | 2560 | 2560 | |
| 5 | Sales | 2390 | 4950 | |
| 14 | Sales returns | 80 | 4870 | |
| 24 | Payment received | 1365 | 3505 | |
| 24 | Discount | 35 | 3470 | |
| 30 | Balance | 3470 | ||
| Amount due | 3470 |
State the name of the document.
State one reason why this document was issued.
State the name of the:
customer
supplier.
Calculate the percentage rate of discount on 24 September 2023.
State two characteristics of each method of payment.
(i) Standing order
(2 marks)
(ii) Direct debit
(2 marks)
Identify the term used to describe an instruction to a bank to make a fixed payment to a supplier on the last day of every month.
Choose your answer
Cheque
Credit transfer
Direct debit
Standing order
A trader sells 20 items at $8 each to a credit customer less a trade discount of 10%.
The customer returns five of these items.
Identify which amount will be shown on the credit note issued.
Choose your answer
$44
$40
$38
$36
Complete the document.
| Invoice Shaw Supplies Potter Road Reigate RH2 1BS | |||
|---|---|---|---|
| Chetsy Ongar Road Addlestone KT13 8AX | No: 1057 | ||
| Date: 1 March 2023 | |||
| Description | Quantity | Unit cost $ | Total cost $ |
| Bikes | 18 | 300 | |
| Trade discount 10% | |||
| Total | |||
| Terms: Cash discount of 5% for payment within 7 days |
Calculate the amount paid if payment was made on:
(i) 3 March 2023
(1 mark)
(ii) 9 March 2023.
(1 mark)
State two reasons for offering a trade discount.
Identify which is a reason for offering a cash discount.
Choose your answer
Paying in cash
Paying promptly
Purchasing in bulk
Regular customer
Complete the document where indicated.
| Invoice Jaydey Ltd Langton Drive Hull HU2 4HY | |||
|---|---|---|---|
| Pharlap Trading Main Street York YO1 6HS | Invoice No 67025 | ||
| Date 18 August 2022 | |||
| Quantity | Description | Unit cost $** | Total cost $ |
| 8 | Bookcases | 28.00 | ....................... |
| 24 | Table lamps | 6.50 | ....................... |
| Subtotal | ....................... | ||
| Trade discount 20% | ....................... | ||
| Total | ....................... |
State two features of a direct debit.
Identify the source document for each transaction.
| Transaction | Source document |
|---|---|
| Returned goods to a credit supplier | |
| Purchased refreshments for the office | |
| Received bank interest | |
| Purchased a non-current asset on credit | |
| Received a cheque from a credit customer |
State two reasons why a customer’s cheque may be dishonoured by the bank.
Which document from a supplier reduces the amount owed by a customer?
Choose your answer
Credit note
Invoice
Purchase order
Statement
Complete the document.
| Invoice DH Trading 25 Swallow Lane Birmingham B27 3MH | |||
|---|---|---|---|
| Myhill Co Westwood Road Beverley HU17 7AB | Invoice No 1503 | ||
| Date 14 July 2020 | |||
| Quantity | Description | Unit Cost $ | Total Cost $ |
| 150 | Packing cases | 6.80 | ...................... |
| 48 | Rolls of tape | 2.50 | ...................... |
| Subtotal | ...................... | ||
| Trade discount 25% | ...................... | ||
| Total | ...................... |
Identify when a credit note is issued to a customer.
Choose your answer
To correct an overcharge on an invoice
To correct an undercharge on an invoice
When goods are sold for cash
When goods are sold for credit
Gina sells goods on credit to Kimi for $600. Gina’s terms of trade are 20% trade discount plus 5% cash discount for prompt settlement.
Identify which entry in Gina's books is correct.
Choose your answer
$480 in the purchases day book
$480 in the sales day book
$456 in the purchases day book
$456 in the sales day book
Leon produced the following invoice.
Complete the document where indicated.
| Invoice Leon Spring Street Newport NP19 3HS | |||
|---|---|---|---|
| Phoenix 22 Kerry Drive Bradford BD8 6GK | No. 3240 | ||
| Date 29 March 2021 | |||
| Quantity | Description | Unit cost $ | Total cost $ |
| 6 | Mobile phones | 85.50 | ................ |
| 36 | USB cables | 2.20 | ................ |
| Subtotal | ................ | ||
| Trade discount 25% | ................ | ||
| Total | ................ |
Complete the table below to show the source document and the book of original entry for each transaction.
| Transaction | Source document | Book of original entry |
|---|---|---|
| Paid bank charges | ||
| Returned damaged goods to a credit supplier | ||
| Purchased a new motor vehicle on credit | ||
| Payment to a supplier by credit transfer |
Which document is sent to credit customers at the end of each month?
Choose your answer
Credit note
Remittance advice
Sales invoice
Statement of account
Which document issued by the seller summarises the transactions for the month?
Choose your answer
Credit note
Purchase invoice
Sales invoice
Statement of account
Identify when a customer would receive a cash discount.
Choose your answer
Bulk purchases
Payment made by cash
Payment made within agreed time
Regular purchases
Complete the document.
| Invoice GLK Ltd Moreton Road Norwich NR1 2BP | |||
|---|---|---|---|
| Frank Waites 22 Redland Drive Lewes BN7 2DH | Number: S2703 | ||
| Date: 14 April 2020 | |||
| Description | Quantity | Unit cost $ | Total cost $ |
| Filing cabinets | 8 | 64.55 | .......................... |
| Office chairs | 22 | 19.80 | .......................... |
| Subtotal | .......................... | ||
| Trade discount 15% | .......................... | ||
| Total | .......................... | ||
| Terms: 2% discount for 30 days settlement. | .......................... |
Which one of the following source documents would show bank interest?
Choose your answer
Bank statement
Cheque counterfoil
Credit note
Invoice
Complete the document where indicated.
| Invoice XS Supplies Water Street Birmingham B18 3WY | |||
|---|---|---|---|
| Lee Trading 16 Outwood Road Leeds LS11 2AB | Invoice No 3240 | ||
| Date 27 November 2019 | |||
| Quantity | Description | Unit cost $ | Total cost $ |
| 150 | CD cases | 1.20 | .......................... |
| 400 | CD label sheets | 0.40 | .......................... |
| Subtotal | .......................... | ||
| Trade discount 20% | .......................... | ||
| Total | .......................... |
Isabella owns a business selling clothing.
State the business document and the book of original entry for each transaction in Isabella’s books of account.
| Transaction | Business document | Book of original entry |
|---|---|---|
| Purchased a new motor vehicle on credit, $5 000 | ||
| Purchased postage stamps, $3 | ||
| Sold goods for cash, $910 |
State one purpose of:
(i) a statement of account
(1 mark)
(ii) a remittance advice.
(1 mark)
Which one of the following is a reason for offering a cash discount?
Choose your answer
Bulk buying
Paying in cash
Prompt payment
Repeat business
What is indicated when a business’s bank statement shows a debit balance?
Choose your answer
Bank is a creditor to the business
Bank is a debtor to the business
Bank made payment by credit transfer
Bank received payment by credit transfer
Complete the following document.
| Credit Note Supreme Furniture 23 High Road London SW7 6BY | |||
|---|---|---|---|
| John Win 104 May Cottage London NS17 4BQ | Credit Note No. 122 | ||
| Date 15 April 2019 | |||
| Description | Quantity | Unit cost $** | Total cost $ |
| Dining chairs | 4 | 27.50 | |
| Sofa chairs | 2 | 212.50 | |
| Subtotal | |||
| Trade discount 10% | |||
| Total | |||
| ** Reason: Faulty goods |