The Agreed Cost of an Item to Be Purchased by a Business

question 67

Multiple Choice

The agreed cost of an item to be purchased by a business on credit is $4,000. The applicable cost will be debited to advertising expense. The item is subject to 5% goods and services tax (GST) and 7% provincial sales tax (PST) . When this transaction is recorded, what amount will be recorded as GST Receivable?

• A) $200 debit
• B) $200 credit
• C) $240 debit
• D) $240 credit
• E) None of these answers is correct.

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Definitions:

Poor Messenger

An individual who lacks credibility or effectiveness in conveying a message or information.

Face-To-Face Conversation

Direct, personal communication between two or more people, physically present in the same location.

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The process of setting the background or circumstances that influence how something is perceived, understood, or interpreted.

Jerome

A given name, often associated with historical figures or used in a contemporary context to identify a person.