Accounting for IGCSE & O level - Accounting Procedures (Section 6 - No. 2)
What is the effect of a refund being made to a trade customer?
Increase trade receivable and decrease cash.
Increase trade receivable and increase cash.
Decrease trade receivable and decrease cash.
Decrease trade receivable and increase cash.
Explanation
A refund involves cash going out, so cash decreases, and trade receivables have to be reduced as the customer is owed money.
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