Price Discrimination

1. A cash discount is best described as a reduction in the sum to be paid:

A. If payment is made either by cash or cheque

B. If purchases are made for cash, not on credit

C. If payment is made by cash, not cheque

D. If payment is made within a previously agreed period

2. Discounts received are:

A. Deducted by us when we pay our accounts

B. Deducted when we receive cash

C. Given by us when we sell goods on credit

D. None of these

3. The total of the ‘Discounts Allowed’ column in the Cash Book is posted to:

A. The debit of the Discounts Received account

B. The credit of the Discounts Received account

C. The debit of the Discounts Allowed account

D. The credit of the Discounts Allowed account

4. Sales invoices are first entered in:

A. The Sales Journal

B. The Sales Account

C. The Purchases Journal

D. The Cash Book

5. The total of the Sales Journal is entered on:

A. The credit side of the General Account in the Sales Ledger

B. The debit side of the Sales Account in the General Ledger

C. The debit side of the Sales Day Book

D. The credit side of the Sales Account in the General Ledger

6. Given a purchases invoice showing 5 items of £80 each, less trade discount of 25 per cent and cash discount of 5 per cent, if paid within the credit period, your cheque would be made out for:

A. £280

B. £285

C. £260

D. None of these

7. An alternative name for a Sales Journal is:

A. Sales Ledger

B. Sales Day Book

C. Sales Invoice

D. Daily Sales

8. Entered in the Purchases Journal are:

A. Purchases invoices

B. Payments to suppliers

C. Trade discounts

D. Discounts received

9. The total of the Purchases Journal is transferred to the:

A. Debit side of the Purchases Account

B. Credit side of the Purchases Account

C. Debit side of the Purchases Day Book

D. Credit side of the Purchases Book...