On Average a Company Has Goods on Hand for 120

question 84

Multiple Choice

On average a company has goods on hand for 120 days before they sell them.They buy their goods on credit with 30-day terms and they sell their goods by offering 20 days to pay.How many days are there between receiving the inventory from suppliers and receiving cash from customers?

• A)90 days
• B)110 days
• C)120 days
• D)140 days

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Definitions:

Merchandise

Goods that are bought and sold by businesses in the ordinary course of commerce.

General Journal Entries

Records of financial transactions where each entry is recorded in a double-entry accounting system, impacting at least two accounts.

Terms 2/10, N/30

Terms 2/10, N/30 are payment terms indicating that a buyer can take a 2% discount on the invoice price if the payment is made within 10 days; otherwise, the net amount is due within 30 days.