PRC-1 · Chapter 2 · Question 95 of 100
'Meteor Electronics' offers a 5% discount for invoices settled within 14 days. A customer misses the deadline and pays the full list amount on day 20. How is this recorded in the cash book?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Enter the full gross amount in the bank column; nothing in the discount column.
Explanation
If the condition for the settlement discount is not met, the discount is forfeit. The customer pays the full invoice value, which is simply recorded in full on the receipt side of the cash book.
More Books of Prime Entry MCQs
- Q97A petty cashier is assigned an imprest of Rs. 8,000. Under what circumstance would the main cashier reimburse more than Rs. 8,000 to the…
- Q98Which of the following is typically NOT a valid source document for entries in the petty cash book?
- Q99When 'Vortex Traders' prepares its monthly accounts, it needs to record the accrual of staff bonuses earned but not yet paid. Which book…
- Q100The total of the discounts received column in the cash book for May is Rs. 15,000. What is the correct ledger posting for this total?
- Q1Which of the following source documents is primarily used to record entries in the sales day book of 'Nova Retailers'?