When a Merchant Sells Merchandise and Lets the Customer Pay

question 87

Multiple Choice

When a merchant sells merchandise and lets the customer pay with a VISA credit card:

• A)The strategy may increase sales dramatically,with no additional costs involved.
• B)At the time of sale,Credit Card Receivable is debited and Sales Revenue is credited for the discounted portion of the sale amount.
• C)The merchant's point-of-sale terminal is linked to a VISA server which automatically credits the merchant's bank account for the full sale amount.
• D)The credit card discount is similar to interest expense and is reported on the income statement separately from operating income as other income (expense).

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Definitions:

Individual

Refers to a single human being as separate from a group, class, or family.

Organization

An entity comprising multiple people, such as an institution or an association, that has a particular purpose.

1099

A series of IRS tax forms used to report various types of income other than wages, salaries, and tips.

IRS Form

A document that is used for reporting and filing information with the Internal Revenue Service (IRS) in the United States.