Your Company Has Been Offered Credit Terms on Its Purchases

question 46

Multiple Choice

Your company has been offered credit terms on its purchases of 4/30, net 90 days. What will be the nominal annual cost of trade credit if your company pays on the 35th day after receiving the invoice? (Assume a 365-day year.)

• A) 30%
• B) 304%
• C) 3%
• D) 87%
• E) 156%

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Definitions:

Materials Requisition

A document or electronic form used to request materials needed for production from the storeroom or inventory management.

Storeroom

A room used for storing goods, materials, or supplies within a business or organization.

Finished Goods

Items that are fully manufactured and available for purchase by consumers.

Underapplied

A situation where the allocated overhead costs are less than the actual overhead costs incurred.