It Is Customary in U

question 50

Multiple Choice

It is customary in U.S. and Canadian businesses for suppliers and vendors to

• A) sell merchandise on a closed account basis.
• B) ask for collateral before extending credit.
• C) consider the significance of loan security as quite important.
• D) minimize the alienation of customers when demanding security.
• E) give trade credit upon request.

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Definitions:

Realized Gross Profit

The total profit a company makes from its sales after deducting the cost of goods sold, but only on transactions completed within the reporting period.

Deferred Gross Profit-Year 2

The portion of profit from installment sales recognized in the second year, not immediately at the time of sale, due to revenue recognition principles.

Cost Of Installment Goods Sold

The cost assigned to goods that have been sold on installment, including both the cost of manufacturing and a portion of interest on the installment sales.

Installment Sales Revenue

Income recognized from sales made where payment is received in periodic installments, often used in financing transactions for high-ticket items.