The Collection of a $6,000 Account Within the 2 Percent

question 25

Multiple Choice

The collection of a $6,000 account within the 2 percent discount period will result in a

• A) debit to Sales Discounts for $120.
• B) debit to Accounts Receivable for $5,880.
• C) credit to Cash for $5,880.
• D) credit to Accounts Receivable for $5,880.

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Definitions:

Business

An organization or enterprising entity engaged in commercial, industrial, or professional activities with the aim of generating profits.

Fixed Asset Turnover Ratio

A financial ratio that measures a company's efficiency in using its fixed assets to generate sales.

Sales Earned

Income a company recognizes after delivering goods or services to a customer, reflecting actual earnings from sales.

Intangible Assets

Non-physical assets that have value, such as intellectual property, trademarks, goodwill, and brand recognition.