Q13RQ - Horngren'S Financial And Managerial Accounting

Question

What are two common methods used when accepting deposits for credit card and debit card transactions?

Step-by-Step Solution

Answer

The net and gross methods are used to accept the deposits of credit card and debit card transactions.

Step 1: Definition of credit card

A credit card is a card that the bank issues to the customers that allow customers to buy goods on credit.

Step 2: Two methods used to accept deposits

The two methods of accepting the transactions of credit and debit cards:

1. Net: In this method, total sales less the processing fees equal the total net amount deposited by the customer. This total net amount is entered as the deposit.

 

     2. Gross: In this method, the total sale amount is recorded. In this method, no processing fees             are deducted from the payments made by the customers.