A Company Purchased Inventory on Credit

question 32

Multiple Choice

A company purchased inventory on credit. The effect of this transaction is that the

• A)earnings per share decreased.
• B)earnings per share increased.
• C)working capital increased.
• D)debt-to-equity ratio increased.

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Definitions:

Receive Payment

The process of collecting money from customers against the outstanding amount due for goods sold or services rendered.

Prepare Reports

The process of organizing and presenting financial data and analyses, typically for business decision-making.

Special Journals

Ledger books dedicated to recording specific types of transactions, such as cash receipts or disbursements, distinct from general accounting records for efficiency and accuracy.

Computerized Accounting Systems

Software programs that manage and process financial transactions and accounting tasks electronically, increasing accuracy and efficiency.