Which of the Following Statements Is Correct

question 77

Multiple Choice

Which of the following statements is correct?

• A) The purchase requisition is the form sent to a supplier to order goods.
• B) The Purchases account is reported as an asset on the balance sheet.
• C) To the customer,a supplier's invoice is a purchase order invoice.
• D) The credit terms,2/10,n/30,allow the customer to take a 2 percent discount if payment is made within 10 days of the invoice,otherwise payment is due in full in 30 days.

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Definitions:

Cash

Currency and coins, along with bank balances, checks, and money orders, that are readily available for use.

Expense Account

An account that tracks money spent or costs incurred in an organization's efforts to generate revenue, representing the cost of doing business.

Credit Balance

The amount that appears on the right side of a ledger account, indicating that a liability has increased or an asset has decreased.

Debt Ratio

The debt ratio is a financial ratio that compares a company's total debt to its total assets, indicating the proportion of a company's funding that comes from debt.