Question  The average collection period is the average amount of time that elapses from a credit sale until the company can use the payment (collection) of the sale. True or false?

Indicate using a (1), (−), or (0) whether each of the following events would probably cause accounts receivable (A/R), sales, and profits to increase, decrease, or be affected in an indeterminate manner: A/R    Sales    ProfitsThe firm restricts its credit standards.    ______________    ______________    ______________The terms of trade are changed from 2/10, net 30, to 3/10, net 30.    ______________    ______________    ______________The terms are changed from 2/10, net 30, to 3/10, net 40.    ______________    ______________    ______________The credit manager gets tough with past-due accounts.    ______________    ______________    ______________

1. Enter the letter for each term in the blank space beside the definition that it most closely matches. A. Sales discount B. Credit period C. Discount period D. FOB destination E. FOB shipping point F. Gross profit G. Merchandise inventory H. Purchase discount I. Cash discount J. Trade discount 1. Goods a company owns and expects to sell to its customers. 2. Time period that can pass before a customer's payment is due. 3. Seller's description of a cash discount granted to buyers in return for early payment. 4. Reduction below list or catalog price that is negotiated in setting the price of goods. 5. Ownership of goods is transferred when the seller delivers goods to the carrier. 6. Purchaser's description of a cash discount received from a supplier of goods. 7. Reduction in a receivable or payable if it is paid within the discount period. 8. Difference between net sales and the cost of goods sold. 9. Time period in which a cash discount is available. 10. Ownership of goods is…

A customer returned damaged goods for credit. Under a perpetual system, which of the seller's accounts decreases? a. sales revenue b. sales returns c. accounts receivable d. purchase returns