Which of the Following Transactions Could Not Result in a Credit

question 17

Multiple Choice

Which of the following transactions could not result in a credit balance in a debtor's account?

• A) Receive a deposit from a debtor for goods ordered.
• B) Customer returns a faulty product after they have paid the account in full.
• C) Customer pays their account after the debt had been written off as a bad debt.
• D) Goods are sold on credit with payment due in the next accounting period.

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Definitions:

Current Asset

Assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business, whichever is longer.

LIFO Cost Assumption

The LIFO Cost Assumption is a principle used in the LIFO inventory valuation method, assuming that the most recently acquired items are the first to be sold, impacting the reported income and inventory costs.

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials to be consumed in the production process.

Consignment

A sales arrangement in which goods are entrusted to a seller, but title to the goods remains with the supplier until they are sold.