The Kansas Company Makes Credit Sales to Customers Who Use

question 169

Multiple Choice

The Kansas Company makes credit sales to customers who use bank credit cards (such as Visa or MasterCard) as well as to customers who use non-bank credit cards (such as American Express or Diner's Club) .In this situation:

• A)Sales to customers using bank credit cards are recorded as cash sales.
• B)Regardless of the type of credit card used by the customer,Kansas records a receivable from the credit card company when a credit sale is made.
• C)Regardless of the type of credit card used by the customer,Kansas estimates uncollectible accounts related to these credit sales using the allowance method.
• D)The fees charged by the credit card company reduce the dollar amount of sales recorded.

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period.

Rent Revenue

Income earned from leasing out property or equipment to another party, reported as part of the operating income in the profit and loss statement.

Accrued Expense

An accounting record of an expense that has been incurred but not yet paid, representing a company's obligation to make future payments for goods and services received.

Incurred

Refers to the recognition of expenses or liabilities that have been consumed or acquired in the course of business operations.