A Local RadioShack Store Wants to Buy a New Line

question 17

Multiple Choice

A local RadioShack store wants to buy a new line of plasma TVs. Manufacturer A offers chain discounts of 18/12, and Manufacturer B offers terms of 17/13. The single equivalent discount rate of ? is the best deal.

• A).7221: Manufacturer A
• B).7216: Manufacturer B
• C).2779: Manufacturer A
• D).2784: Manufacturer A
• E)None of these

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Definitions:

General Ledger

The primary accounting record of a company that uses double-entry bookkeeping, summarizing all transactions into debits and credits.

Allowance Account

A contra asset account that reduces the gross amount of receivables to reflect a more accurate value of expected collections.

Liability Account

An accounting record tracking obligations or debts that a company owes to others.