Over the course of an accounting period, the amount owed to a firm by its debtors increased by £50,000. During the period, credit sales totaled £230,000 and money received from debtors amounted to £190,000. The £10,000 apparent discrepancy could be due to unrecorded . . .
Select ONE answer:
- discount allowed
- bad debts
- sales returns
- credit sales
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 4
- Not correct – Recording discount allowed not previously recorded would reduce the balance on the debtor control account.
- Not correct – Recording bad debts not previously recorded would reduce the balance on the debtor control account.
- Not correct -Recording sales returns not previously recorded would reduce the balance on the debtor control account.
- Correct – Based solely on the total of the credit sales (£230,000) and the total amount received from debtors (£190,000) it would appear that debtors increased by £40,000. However, the actual increase is £50,000. Therefore, the correct solution is the one which, when corrected, would increase the balance on the debtor control account.
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