quiz chapter 5

What is the primary purpose of trade payables in accounting?

• To record cash inflows

• To record amounts owed to suppliers for goods and services

• To track revenue from sales

• To account for employee salaries

Which of the following is classified as a current liability?

• Trade receivables

• Trade payables

• Share capital

• Vehicle

When a company makes a payment to a supplier for an outstanding trade payable, which account is credited?

• Accounts Receivable

• Bank

• Sales

• Trade Payables

What is the effect of recording a trade payable on the balance sheet?

• Increases assets

• Increases liabilities

• Increases equity

• Reduces equity

The term "trade creditors" refers to:

• Suppliers who provide goods and services on credit

• Customers who owe money for goods or services

• Financial institutions that lend money

• Investors who own shares in the company

What happens when a company records a cash payment from purchase of goods on credit ?

• Increase in assets and decrease in liabilities

• Decrease in both assets and liabilities

• Decrease in assets and increase in liabilities

• Decrease in liabilities and increase in equity

Which financial statement reflects trade payables?

• Income Statement

• Statement of Financial Position

• Cash Flow Statement

• Statement of Retained Earnings

What is a cash discount?

• A reduction in the price of goods or services offered to a customer for immediate payment

• A reduction in the amount payable for early settlement of an invoice

• A discount provided for trade relations with specific suppliers

• A discount based on volume of purchase

If a company receives a cash discount of 2% for payment within 10 days on a RM1,000 invoice,

what will be the amount to be paid?

• RM1,000

• RM980

• RM1,020

• RM900

What account is debited when trade payables are settled?

• Cash

• Bank

• Trade payble

• Sales