Podcast
Questions and Answers
Which scenario exemplifies a cash transaction?
Which scenario exemplifies a cash transaction?
- A company orders office supplies online and pays upon receiving the invoice.
- A business hires a consultant and agrees to pay the fees after the project is completed.
- A customer buys groceries at a supermarket and pays at the checkout. (correct)
- A retail store purchases inventory from a supplier with payment due in 30 days.
What characteristic distinguishes a credit transaction from a cash transaction?
What characteristic distinguishes a credit transaction from a cash transaction?
- Credit transactions are only applicable to businesses, whereas cash transactions are for individual consumers.
- Credit transactions permit the buyer to pay for goods or services at a later date, unlike cash transactions. (correct)
- Credit transactions always involve a higher monetary value than cash transactions.
- Credit transactions require payment at the time of purchase, while cash transactions allow for delayed payment.
Velocity Book Publishers' agreement with Q Print, where payment is due 60 days after delivery, is an example of what?
Velocity Book Publishers' agreement with Q Print, where payment is due 60 days after delivery, is an example of what?
- A spot transaction.
- A cash sale.
- A barter agreement.
- A credit transaction. (correct)
What do businesses typically agree upon in advance when engaging in credit transactions?
What do businesses typically agree upon in advance when engaging in credit transactions?
Which of the following scenarios best illustrates a typical business expense?
Which of the following scenarios best illustrates a typical business expense?
Why is the transaction between Velocity Book Publishers and Q Print a credit transaction?
Why is the transaction between Velocity Book Publishers and Q Print a credit transaction?
Which of the following is an example of businesses buying goods?
Which of the following is an example of businesses buying goods?
Which of the following exemplifies business incurring expenses for various services?
Which of the following exemplifies business incurring expenses for various services?
Which of the following is an example of business incurring labour costs?
Which of the following is an example of business incurring labour costs?
A business buys stationery and computers, what type of business transaction is this?
A business buys stationery and computers, what type of business transaction is this?
A garage purchases car parts and components to repair customers' cars. What type of business transaction is this?
A garage purchases car parts and components to repair customers' cars. What type of business transaction is this?
If a retailer buys goods for resale to shoppers, what type of business transaction is this described as?
If a retailer buys goods for resale to shoppers, what type of business transaction is this described as?
Which scenario best illustrates a business selling goods or services and getting paid for it?
Which scenario best illustrates a business selling goods or services and getting paid for it?
What is a key factor that typically leads to classifying a transaction as a credit transaction?
What is a key factor that typically leads to classifying a transaction as a credit transaction?
What is a key characteristic of cash transactions?
What is a key characteristic of cash transactions?
What type of transaction is it when a business purchases goods or services and pays immediately?
What type of transaction is it when a business purchases goods or services and pays immediately?
What is one major distinction between cash and credit transactions?
What is one major distinction between cash and credit transactions?
In a credit transaction, when does a buyer typically pay for the items purchased?
In a credit transaction, when does a buyer typically pay for the items purchased?
If a company gets electricity, what type of business transaction is this?
If a company gets electricity, what type of business transaction is this?
When is payment typically made in a cash transaction?
When is payment typically made in a cash transaction?
Flashcards
Business Transaction
Business Transaction
A business activity that involves the exchange of goods, services, or money between two or more parties.
Cash Transaction
Cash Transaction
The buyer pays for goods/services upon exchange or in advance.
Credit Transaction
Credit Transaction
The buyer is allowed time to pay after receiving goods/services.
Cash Sale
Cash Sale
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Credit Sale
Credit Sale
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Cash Purchase
Cash Purchase
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Credit Purchase
Credit Purchase
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Invoice
Invoice
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Study Notes
- Every business sells goods or services to customers and gets paid
- Every business buys goods and services from suppliers and pays
- Retail businesses buy goods for resale
- Garages buy car parts for repairs, businesses buy stationery and computers
- Businesses have employees and pay labour
- All businesses incur expenses: electricity, telephone, rental costs, local taxation
Cash and Credit Transactions
- Business transactions are either cash or credit
- With cash transactions, buyers pay upon exchange or in advance
- A shop or supermarket is a cash transaction because customers pay at the cash desk
- With credit transactions, a buyer pays later, within a ‘credit period’
Example of a Credit Transaction
- Velocity Book Publishers ordered 5,000 books from Q Print
- Velocity Book Publishers had 60 days to pay after printing
- Q Print delivered the books into the Velocity Book Publishers warehouse on March 1st
- Q Print requested a $15,000 payment (invoice), payable on or before May 1st
- The Velocity Book Publishers do not have to pay when ordering, making it a credit transaction
- Most transactions between two businesses are credit transactions
- Businesses buy from other businesses and sell to other businesses on credit
- Credit terms are agreed upon in advance
Cash vs Credit Transactions
- Cash sale: Goods or service provided and customer pays immediately
- Credit sale: Goods or service provided and customer pays later
- Cash purchase: Goods or service purchased and paid for immediately
- Credit purchase: Goods or service purchased and paid for later
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