Question

Which one of the following general statements about credit cards is correct?

1) Credit card payments must be entered in the receipts journal
2) Credit card receipts are deposited into the accounts receivable account
3)redit card sales do not involve any linked accounts
4) The credit card discount fee is deducted from the receipts

Answer 1

The correct general statement about credit cards is that the credit card discount fee is deducted from the receipts, as this fee is an amount charged by the credit card processor to the merchant which is subtracted before the final amount is deposited into the merchant's account.

Step-by-step explanation:

The correct general statement about credit cards is that the credit card discount fee is deducted from the receipts. By definition, a discount fee is an amount charged by a credit card processor to a merchant for the service of handling credit card transactions. This fee is deducted before the sales amount is deposited into the merchant's bank account. Therefore, the merchant receives the sales revenue minus the credit card discount fee when a customer uses a credit card to make a purchase.

Option 1 is incorrect because credit card payments are not entered into the receipts journal as immediate revenue but as transactions involving a credit card processor. Option 2 is incorrect as credit card receipts are not directly deposited into accounts receivable; instead, they involve a merchant service account. Option 3 is incorrect as credit card sales definitely involve linked accounts, including the merchant account and the processor's fees.