Regarding the Gross Method of Handling Credit and Debit Card

question 26

Multiple Choice

Regarding the gross method of handling credit and debit card transactions,which of the following statements is correct?

• A) The total sale amount is deposited on the date of the actual sale.
• B) The processing fees for all transactions processed for the month are deducted from the company's bank account, often on the last day of the month.
• C) On the date of sale, the Sales Revenue account is credited for the amount of sale less the processing fee.
• D) The journal entry on the date of sale is identical to a journal entry made for a sale on account.

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Definitions:

Available-for-sale Debt Investment

A type of financial asset representing debt instruments that a company plans to sell before their maturity date but are not actively traded for profit in the short term.

Unrealized Gain-Equity

An increase in the value of an investment or asset that has not been sold, as recorded in the equity section of the balance sheet.

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Equity Security

A financial instrument representing ownership in a company, such as stocks, entitling holders to a share of the company's profits.