A government allows discounts on taxes if payments are made within two months of the levy date. How does the government account for the discounts as they are being taken?
A. Allowance for discounts is debited for the amount of the discounts taken.
B. Expenditures are debited for the amount of the discounts taken.
C. Revenue is debited for the amount of the discounts taken.
D. Allowance is credited for the discount and is recorded at the time the discount is taken.
Question 2
A reversing entry could be used if
a. there is an adjusting entry.
b. the adjusting entry increases an asset or liability account.
c. the adjusting entry account did not have a previous balance.
d. all of these were true.
e. none of these were true.
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