Lesson 1, Chapter 6

Question 1

What are Cash Purchase?

Answer 1

• Is one which is made for cash

-The liability for the item purchased is discharged immediately, rather than being on credit terms & paid first after an agreed period

Question 2

What are Cash Sale?

Answer 2

A cash sale is a sale which results in a transfer of goods & services for immediate cash payment to the seller

Question 3

What are Credit Transactions?

Answer 3

When the goods are given to the customer in exchange for future payment.

Question 4

What are Invoices?

Answer 4

• Is sent to the customer which records who the customer is, the items that are sold, the date of the sale and the value of the transaction (how much the customer owes the supplier).
• States how long the customer can wait before paying for the product (often 30 days).

Question 5

What are the Credit Sale?

Answer 5

No cash has changed hands at the point of sale

Question 6

What are Credit Purchases?

Answer 6

Are transactions where the supplier provides goods to the business before they are paid for

Question 7

What are goods?

Answer 7

• Are the items which the business sells

Question 8

What are services?

Answer 8

Example: a firm of accountants provides accounting services

Question 9

What are Purchases?

Answer 9

Purchases are goods that you buy into your business.