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Which of the following is correct in relation to the trade receivables control account?
(I) The gross value of goods returned by credit customers is debited to the trade receivables control account.
(II) Trade discounts to credit customers are excluded from the trade receivables control account.
(III) Discount allowed for early payment or settlement by credit customers is debited to the trade receivables control account.
WHICH IS/ARE CORRECT?
(A) i, ii
(B) i
(C) ii
(D) ii, iiiI do not know answer… Please help.
I When goods are returned this should reduce the customer’s indebtedness so should be credited to the individual receivables account and to the control account.
II Trade discounts are simply a reduced selling price and will be shown on the invoice.
III No. Discounts allowed will be credited to the individual account and the SLCAC so as to reduce the amount owed.
I suppose, given the options C is the correct answer though the used of the word ‘excluded’ is odd. The discount is automatically posted because the invoice is less, but there is no explicit entry for the discount.
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