Credit Transactions Flashcards
1
Q
Credit Terms: a/b n/c. Eg. 2/14 n/60
A
2% discount if paid within 14 days. Must be paid in full in 60 days
2
Q
Purpose of a Statement of Account
A
It serves as a summary of the credit transactions and its payments that have occurred between a supplier and its Account Receivable
3
Q
Explain why credit fees is classified as revenue
A
As with a cash fee, a credit fee increases revenue because it increases assets and increases owner’s equity. The only difference is that for a cash fee, the increase in assets in the form of cash (bank increases), whereas for a credit fee for services, the asset that increases is Accounts Receivable.
