Answer:
The importer accepts this price, so his bank will <u>debit</u> the importer's account in the amount of <u>$500000</u>
Explanation:
Debiting an account removes money from the account. Crediting an account adds money to the account.
The bank will therefore <em>debit</em> his account because the money will be taken out and paid to the exporter.
The amount that the importer pays in dollars can easily be calculate as:
€512,100 / €1.0242 = $500000
Answer:
B. Perpetuating the status quo
Explanation:
The status quo is the current state of affairs. The manager preferred to safely quote the previous sales as future estimate. The previous sales in this case represents the status quo.
Answer:
It will increase expense, thereby reducing the profit mentioned in the income statement and decrease the current asset (debtor) recorded in the balance sheet.
Explanation:
Bad Debt is an expense that is recorded when it is expected that the customer, who owes a debt to the business, might default in clearing their dues.
As such when the bad debt amount is increased it will result in a rise in expense and therefore the profit, as stated in the profit and loss (income statement) of the sole trader would decrease.
Moreover, it will also decrease the value of trade receivables (current assets) mentioned in the balance sheet. The following entry would be recorded:
Bad Debts (Dr) xxxxx
Trade Receivables (Cr) xxxxxx
Hence, the expenses will increase while the current asset will decrease.
