Which Method May Be Used to Record Cash Discounts a Company

question 17

Multiple Choice

Which method may be used to record cash discounts a company receives for paying suppliers promptly?

• A) Net method.
• B) Gross method.
• C) Average method.
• D) Both the net method and the gross method.

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Definitions:

Break-even Point

The point at which total income matches total outgoings, leading to neither a profit nor a loss.

Sales Dollars

This term represents the total revenue generated from the sales of goods or services, expressed in currency units.

Cost Structure

The relative proportion of fixed, variable, and mixed costs in an organization.

Break-even

The point at which total revenue equals total costs, resulting in no net loss or gain.