Company a and Company B Regularly Trade Between Each Other

question 32

Multiple Choice

Company A and Company B regularly trade between each other. They have agreed to offset their accounts receivable and accounts payable and settle them on a net basis. At 30 June Company A has accounts receivable of $40 000 owing from Company B but also has accounts payable of $10 000 owing to Company B. Which of the following statements is correct?

• A) The net payable from Company A is $30 000.
• B) The net receivable from Company B is $40 000.
• C) Company A offsets the account payable of $10 000 against the account receivable and presents the net amount of $30 000 in their financial statements as accounts receivable.
• D) Company B offsets the account payable of $10 000 against the account receivable and presents the net amount of $30 000 in their financial statements as accounts receivable.

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Definitions:

Incentive Pay

Additional compensation awarded to employees to motivate increased work performance or productivity.

Personal Days

Allocated days off provided by an employer for personal needs, separate from vacation or sick leave.

Bonuses

Bonuses are financial incentives or rewards given to employees or members of an organization, typically based on performance or achieving certain targets.

Payday Loan

A brief-duration loan with high interest rates, usually payable by the borrower on their upcoming payday.