A sales discount does notO provide the purchaser with cash savingreduce the amount of cash received from acredit saleincrease a contra-revenue accountincrease an operating expense accountAssuming the customer settled his accountwithin the discount period, Sales 10,000,Sales return - 500, terms 2/10. How much isthe Sales Discounts? *O 200190O 10O 500

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Answered: A sales discount does not provide the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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It is bad money management to use credit. True or false.
3.-The objective of accounts receivable management is to collect receivables as soon as possible without losing sales by applying high-pressure collection techniques. True or false?
What is the primary reason why most businesses want to sell on a credit basis if it is preferable for sellers to collect advance payments from customers and/or accept cash transactions only? Give and explain a credit/collection-related task of (a) credit manager and (b) collections manager.
Which is correct with regards to the effects of restricting credit standards? a. Investment in accounts receivable will likely increase b. An increase in recognition of doubtful accounts expense will probably happen c. Positive impact on the net profit can be noted from decline in the quantity of goods sold d. Quantity of units sold will probably decrease and will result to a lower sales revenue
Which of the following statements is false? O A. A positive cash conversion cycle means the company is paying its payables before receiving its receivables. B. A negative cash conversion cycle means the company is collecting its receivable before paying its payables. C. The cash conversion cycle is the length of time required for the company to recieve its inventory and then receive cash from the sales of its inventory. D. All of the above statements are true.
MULTIPLE CHOICE What is the effect of the following situations on the cost of accounts receivable financing? (A) A more thorough credit check is undertaken. (B) Receivables are sold without recourse. A. (A) Increase; (B) DecreaseB. (A) Decrease; (B) IncreaseC. (A) Decrease; (B) DecreaseD. (A) Increase; (B) IncreaseE. (A) Increase; (B) No effect
Receivables are valued and reported in the statement of financial position at their gross amount less any sales returns and allowances and less any cash discounts. True or False
The Cash Over and Short account: Multiple Choice Is used to record the income effects of cash overages and cash shortages. Is not necessary in a computerized accounting system. Can never have a credit balance. Is used when the cash account reports a credit balance. Can never have a debit balance.
Accounting for long-term credit sales transactions utilizing notes receivable Multiple Choice A. ignores interest unless an interest rate is specified in the note. B. makes it difficult to assess the degree to which a company’s overall earnings are due to profitable credit sales versus profitable customer financing. C. achieves a clear separation between income from credit sales and interest earned. D. is controversial because it necessitates use of an assumed interest rate.

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A sales discount does not provide the purchaser with cash saving reduce the amount of cash received from a credit sale increase a contra-revenue account increase an operating expense account