Question

1. Why do you think merchants keep the VISA payment option? (4) 2. Refer to the reading material posted and discuss at least three differences between invoice created through regular credit purchase and invoice through VISA purchase.(2*3) 3. What kind of ledger balance is VISA payable and why?( hint - asset, liability etc.)(5) 4. Explain the journal entry for creating visa purchase and paying visa.(refer document)(5)

Answer 1

Since the Document is not available as mentioned in Questions, therefore, answering the questions in a generalized way.

1.

VISA is the most widely used company which facilitates and verifies electronic fund transfer throughout the world. VISA has become so widely popular because of the 3 reasons or 3 levels of benefit provided by it, which are Traditional benefits, Signature benefits and Infinite Benefits provided to the Merchants worldwide. Some of these benefits are auto rental collision damage coverage, emergency card replacement, trip cancellation, travel accident insurance, which can be categorised into above mentioned benefits.Hence, Merchants keep VISA payment option.

2.

The Three difference between the invoice created by VISA purchase or through Regular Credit purchase is that Invoice created by VISA mentions: A) Dates, B) Product and Service Descriptions, and C) Amount, which helps us to have a quick match of Invoice and Payments, thus reducing the time consumed during manual interventions, these three might be or might not be mentioned in invoice created by other credit purchase.

3.

VISA's are payable at Negative Asset, that is the Liability. Thus balance owed can be treated as Negative Asset or "Contra" Asset or Liability. Since via use of VISA services through Cards one pays his dues, amount owed,etc. which are authenticated and verified by VISA. Therefore VISA services are used to settle out amount which are nothing but Liability.

4.

Since VISA Purchase are basically purchase is basically a one-time expense for some years, or more or less regarded as subscription therefore, it must be debited from Prepaid account, Prepaid Account is an asset, asset can only be increased when there is a debit, therefore debit is shown for VISA purchase. Paying VISA is the amount payable to VISA after every successful transaction, and can be regarded as transaction fees which is an expense and which also needs to debited and needs to be shown as debit. This explains the Journal Entry for both VISA Purchase and Paying VISA.

Again these are Generalized Answers because The Passage/Document was not visible.

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