Question

TRUE OR FALSE

1. Sales to customers who use nonbank credit cards, such as American Express, are generally treated as credit sales.
2. Retailers record all credit card sales as charge sales.
3. The service fee that credit card companies charge retailers varies and is the primary reason why some businesses do not accept all credit cards.
4. The document issued by the seller that informs the buyer of the details of sales returns is called a credit memorandum.
5. A seller may grant a buyer a reduction in selling price and this is called a sales allowance.
6. The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable.
7. Merchandise Inventory normally has a debit balance
8. A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30 days after the invoice date to take advantage of the cash discount.
9. Discounts taken by the buyer for early payment of an invoice are called Cash Discounts by the buyer.

Answer 1

1. Sales to customers who use nonbank credit cards, such as American Express, are generally treated as credit sales. True
2. Retailers record all credit card sales as credit sales. False
3. The service fee that credit card companies charge retailers varies and is the primary reason why some businesses do not accept all credit cards. True
4. The document issued by the seller that informs the buyer of the details of sales returns is called a credit memorandum. True
5. A seller may grant a buyer a reduction in selling price and this is called a sales allowance. True
6. The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable. True
7. Merchandise Inventory normally has a debit balance. True
8. A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30 days after the invoice date to take advantage of the cash discount. False
9. Discounts taken by the buyer for early payment of an invoice are called Cash Discounts by the buyer. True