What does the term 2/10,n/30 mean?

2% discount if paid in 10 days, due in 30 days

What is the entry when a customers receives the sales discount?

DR: Discount Allowed DR: Cash CR: A/R

What does the term net 30 mean?

Payment is due 30 days from invoice date.

Best define terms of sale.

Arrangement a company makes with its customers.

Why would a business sell goods Cash on Delivery (COD)?

It doesn't trust the customer to pay on time.

What is the journal entry for a sale on account?

DR: A/R CR: HST Payable CR: Sales

How does a business ensure that discount are taken when available?

Need an employee to check purchase invoices for a discount.

A business may not have an account for Discounts Allowed. Why?

It doesn't offer sales discounts.

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BAF3M - Chapter 10.5

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Answers

1
What does the term 2/10,n/30 mean?
2% discount if paid in 10 days, due in 30 days
$2 off if paid in 10 days, due in 30 days
10% discount if paid in 2 days, due in 30 days
$10 off if paid in 2 days, due in 30 days
2
What is the entry when a customers receives the sales discount?
DR: Sales DR: Cash CR: A/R
DR: Discount Allowed DR: Cash CR: A/P
DR: Cash CR: Discount Allowed CR: A/R
DR: Discount Allowed DR: Cash CR: A/R
3
Where does Discount Allowed appear?
Deducted from Sales
As a liability
Add to COGS
Deducted from Equity
4
Where do Discounts Earned appear?
As an asset.
Increase in Equity
Deduct from Purchases
Deduct from Sales
5
What does the term net 30 mean?
Sale was made 30 days ago.
The profit from the sale is $30.
Payment is due 30 days from invoice date.
Bill will arrive in 30 days.
6
Best define terms of sale.
Arrangement a company makes with its customers.
When a product is sold and the company breaks even.
An arrangement between head office and the sales team.
The selling of a product for profit.
7
Why would a business sell goods Cash on Delivery (COD)?
Cash is the safest form of payment
None of the answers
It doesn't trust the customer to pay on time.
It is a trusted customer who always pays on time.
8
What is the journal entry for a sale on account?
DR: A/P CR: HST Payable CR: Sales
DR: A/R CR: HST Payable CR: Cash
DR: A/R CR: HST Payable CR: Sales
DR: A/R DR: HST Recoverable CR: Sales
9
How does a business ensure that discount are taken when available?
Call the supplier to check
All answers are correct
Discounts are offered on every sale so it's simple.
Need an employee to check purchase invoices for a discount.
10
A business may not have an account for Discounts Allowed. Why?
The purchase and sales discounts offset each other.
It doesn't offer sales discounts.
All the answers are correct.
It's just assumed that discounts are allowed.

BAF3M - Chapter 10.5 Flashcards | StudBud