I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART D: RECORDING TRANSACTIONS AND EVENTS 

 

224

 

1 

C 

The customer goes bankrupt 

2 

B 

$5,000 + (5%  120,000) = $11,000 

3 

2% of $200,000 = $4,000. Therefore the allowable needs to be increased by $2,000. 

4 

If a receivables allowance is increased, expenses in the statement of profit or loss are increased.  

5 

 

 

Debit 

Credit 

Irrecoverable debts expense 

x 

 

Trade receivables 

 

x 

Allowance for receivables 

 

 

 

The allowance for receivables balance is not affected.  

 

 

 

 

 

 

Now try ... 

 

Attempt the questions below from the Practice Question Bank 

 

Qs 47 – 50  

 

 

 

 

 

 

 

 

 

 

 

 

 

ANSWERS TO QUICK QUIZ 

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225 

C H A P T E R 

 

 

TOPIC LIST 

SYLLABUS 

REFERENCE 

1  The nature of sales tax and how it is collected 

D1(c),(d)

2  Accounting for sales tax 

D1(d)

 

Sales tax

Many business transactions involve sales tax (eg VAT in the UK). 

Invoices and bills show any sales tax charged separately. 

Sales tax is charged on the supply of goods and services. It is an 

indirect tax. 

Section 1 explains how sales tax works. 

Section 2 deals with the accounting treatment of sales tax. If you 

understand the principle behind the tax and how it is collected, 

you will understand the accounting treatment. 

 

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