Credit Notes from Suppliers in the Purchase Returns Day Book

question 53

Multiple Choice

Credit notes from suppliers in the purchase returns day book:
Please select all that apply.

• A) Reduce amounts owed to trade payables.
• B) Record the total amount of the credit note, the net expense and the VAT on the net expense.
• C) Are totalled up daily and the daily total credited to the trade payables control account.
• D) Analyse net credits from suppliers across nominal ledger expense headings.

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Definitions:

Differential Analysis

The process of comparing the financial differences between alternative business decisions or scenarios, focusing on costs and benefits that change between options.

Differential Cost

The difference in cost between two alternative decisions or changes in output levels.

Differential Cost

The difference in cost between two business decisions, focusing on how costs change under different alternatives.

Product Cost Method

A cost-plus method of price setting in which only the costs of manufacturing the product are included in the cost amount to which the markup is added.