When a Credit Sale Is Made with Terms of 2/10,n/30

question 85

Multiple Choice

When a credit sale is made with terms of 2/10,n/30 on May 10 and the customer's check is received on May 19,which of the following is true about the May 19 journal entry?

• A)The debit to cash will equal the credit to accounts receivable because the discount was recorded on May 10.
• B)There will be a debit to sales discounts on May 10.
• C)The debit to cash will be less than the credit to accounts receivable on May 19.
• D)There will be a credit to sales discounts on May 19.

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Definitions:

Principle of Diversification

A risk management strategy that mixes a wide variety of investments within a portfolio to minimize risks.

Efficient Market

A financial market theory stating prices fully reflect all available information, making it impossible to consistently achieve higher returns.

Concentrating Investment

Allocating a significant portion of an investment portfolio to a single investment or a small group of investments, increasing potential risk and return.

Systematic Risk Principle

The concept that the overall market or economy has inherent risks that affect all investments to some degree, and these risks cannot be eliminated through diversification.