week 4

Question 1

where do returns feature

Answer 1

statememt of profit or loss

Question 2

where are returns deducted from

Answer 2

revenue

Question 3

where are purchases returns deducted from

Answer 3

purchases

Question 4

where are trade discounts given

Answer 4

via reduced prices

Question 5

where does credit go until it has been paid

Answer 5

trade receivables

Question 6

where does delivery charges go if the business selling the product has to pay for them

Answer 6

expenses

Question 7

where does delivery charges go if the business buying the product has to pay for it

Answer 7

purchases

Question 8

what are ‘going concern’ conventions

Answer 8

assumes that the business will continue in operation for the foreseeable future

Question 9

accural accounting

Answer 9

ensure that expenses and income are matched as closely as possible - make sure the timings match

Question 10

what is the fundamental rule applied to inventory valuation

Answer 10

inventory is valued at the lower of cost and net realizable velue

Question 11

what is net realizable value

Answer 11

the amount for which the inventory could be sold, less any incidental expenses of sale