The Entry to Record the Receipt of Payment Within the Discount

question 94

Multiple Choice

The entry to record the receipt of payment within the discount period on a sale of ¥12,500 with terms of 2/10, n/30 will include a credit to

• A) Sales Discounts for ¥250.
• B) Cash for ¥1,225.
• C) Accounts Receivable for ¥12,500.
• D) Sales Revenue for ¥12,500.

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Definitions:

Cash

A current asset account that represents currency or currency equivalents that can be accessed immediately or near-immediately.

Sales

The total amount of revenue generated from selling goods or services.

Perpetual Inventory System

A method used by businesses to keep a real-time record of inventory levels, constantly updating with every sale and purchase.

Merchandise Inventory

Goods that a company holds for the purpose of selling them to customers.