A $1,000 Note from One of Your Customers Was Collected

question 17

Multiple Choice

a $1,000 note from one of your customers was collected by the bank

• A)added to the company's books
• B)subtracted from the company's books
• C)added to the bank statement balance
• D)subtracted from the bank statement balance

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Definitions:

Net Method

An accounting technique where discounts for early payment are assumed to be taken, reducing the amount recorded as accounts receivable.

Periodic Inventory System

An inventory valuation method where the inventory count and cost of goods sold is determined at the end of the accounting period.

Terms 4/15, N/60

A commercial credit term indicating that a 4% discount is available if paid within 15 days, with the net (full) amount due within 60 days.

Discount Lost

The expense incurred when a company fails to take advantage of the early payment discounts offered by suppliers.