What Is the Legal Effect of Using a Credit Card

question 44

Multiple Choice

What is the legal effect of using a credit card?

• A)A cheque is drawn on a financial institution to pay for goods and services purchase by the credit holder.
• B)The vendor selling the product advances credit to the purchaser and the debt is later paid by the card issuer.
• C)The bank undertakes payment on behalf of the card issuer and the amount becomes a debt payable to the card holder.
• D)The card issuer undertakes payment on behalf of the card holder and the amount becomes a debt payable by the card holder to the card issuer.

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Definitions:

Trial Balance

A spreadsheet where the totals of all ledger balances are gathered into equal totals in debit and credit columns for accounts.

Debit Column

A column in financial accounting used to record entries that decrease liabilities and increase assets or expenses.

Credit Column

A section on the right side of an accounting ledger used to record increases in liability, equity accounts, and revenue, or decreases in assets and expense accounts.

Ledger

A comprehensive collection of a company's accounts, where all transaction data from the journal is summarized and classified.