Basic Financial Accounting - Goods For Resale, Cogs and Trade Creditors

The correct answer is that the trade creditors account (liability) is credited 400.000 while the inventory account (asset) is debited 400.000. This is because when goods are purchased for resale on credit, the trade creditors account is credited to reflect the increase in the liability owed to the vendor. At the same time, the inventory account is debited to reflect the increase in the asset of goods held for resale. This follows the basic accounting principle of double-entry, where every transaction has equal debits and credits.

The correct answer is the first option because when goods are purchased for resale and paid for in cash, the cash account (asset) is credited to reflect the decrease in cash, while the inventory account (asset) is debited to show the increase in inventory. This follows the basic accounting principle of double-entry, where every transaction has equal debits and credits.

The correct answer is that the trade creditors account (liability) is debited 70.000 while the bank account (asset) is credited 70.000. This is because the company is paying off its debt to the vendor, which is recorded as a decrease in the liability to the trade creditors. At the same time, the company is transferring money from its bank account to the vendor's bank account, which is recorded as a decrease in the company's assets.

The correct answer is that the trade creditors account is credited 300.000 while the inventory account is debited 240.000. This is because the company purchased goods for resale, so it incurred a liability to the vendor (trade creditors account) for the full purchase amount of 300.000. The company also acquired an asset (inventory) worth 240.000, which represents the cost of the goods. Additionally, the company paid VAT of 60.000, which is a liability (input VAT account) that is fully deductible. Thus, the input VAT account is debited for 60.000.

When goods are returned for resale, the inventory account should be debited to increase the inventory value, as the company now has more goods available for sale. At the same time, the cost of goods sold account should be credited to reduce the expense associated with the goods that were originally sold but are now being returned. This reflects the fact that the company did not actually incur the cost of selling those goods. Therefore, the correct answer is: The inventory account (asset) is debited 45.000 while the cost of goods sold account (profit/loss) is credited 45.000.

The correct answer is the first option: The cash account (asset) is credited 250.000 while the inventory account (asset) is debited 200.000. Finally, the input VAT account (liability) is debited 50.000. This is because the company purchased goods for resale and paid for them in cash, so the cash account is credited. The inventory account is debited to record the increase in inventory. The input VAT account is debited to account for the VAT paid, which is fully deductible.

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When inventory becomes impaired and can no longer be sold, it needs to be written down to its net realizable value. In this case, the net realizable value is 13,000. To record this, the inventory account (asset) needs to be credited for the decrease in value, which is 107,000 (120,000 - 13,000). At the same time, the impairment of inventory account (profit/loss) needs to be debited for the same amount to reflect the loss in value. Therefore, the correct answer is: The inventory account (asset) is credited 107,000 while the impairment of inventory account (profit/loss) is debited 107,000.

The correct answer is that the inventory account (asset) is credited 392.000 while the cost of goods sold account (profit/loss) is debited 392.000. This is because the cost of goods sold represents the cost of the inventory that has been sold, and it needs to be recorded as an expense in the profit and loss statement. By debiting the cost of goods sold account, the expense is recorded, and by crediting the inventory account, the value of the inventory is reduced.

The credit note received from the vendor is a reduction in the amount owed to the vendor, so the trade creditors account (liability) should be debited for the full amount of 50,000. The inventory account (asset) should be credited for the value of the goods returned, which is 40,000. The VAT amount of 10,000 should be credited to the input VAT account (liability), as it represents a reduction in the VAT liability for the company.