When General Motors Provides Payments or Price Reductions to Its

question 14

Multiple Choice

When General Motors provides payments or price reductions to its new car dealers as rewards for participating in advertising and sales support programs,it is granting a .

• A)trade discount
• B)functional discount
• C)promotional allowance
• D)trade credit
• E)cash discount

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Definitions:

Notes Payable

Liabilities represented by formal agreements or promissory notes to pay specific amounts of money at designated times.

Interest Payable

The amount of interest expense that has been incurred (accumulated) but not yet paid as of a specific date.

Interest Expense

The cost incurred by an entity for borrowed funds, typically reported on the income statement.

Accrued Liability

Liabilities recognized on the books before they’re paid for, representing expenses that have been incurred but not yet settled in cash.