Final answer:
The question relates to a GST transaction which is a common accounting task. Since the advertising expense was GST exclusive, there should be no debit or credit to ABC's GST account. If GST were applicable, it would be debited to GST paid, making it an asset.
Step-by-step explanation:
The question is regarding the Goods and Services Tax (GST) and how it affects the accounting records of ABC's company after paying for advertising services. In this case, ABC did not pay GST on the invoice but will have received GST from its customers on its sales. When we pay for something where GST is not included, like this advertising expense, ABC would typically not have any GST to reclaim (or paid GST to make receivable to them from the tax authorities).
Therefore, there is no debit or credit to ABC's GST account resulting from this transaction based on the information provided. It could be a trick question, since none of the provided answer choices accurately reflects the situation as explained in the question (which specifies the cost is GST exclusive). If GST were applicable, then ABC would record a debit to GST paid since they would be paying GST on the advertising services, making it an asset until such a time when it can be reclaimed against GST collected.
For a GST exclusive price of $410, if GST was applicable, usually, we would add the GST to the expense (ex: 10% GST would be $41). This amount would be debited (increased) to the GST paid account, which is a current asset for GST registrants because it represents the GST they have paid on purchases that will be reclaimed against the GST they have collected from sales.