A Sales Discount Does Not

question 144

Multiple Choice

A sales discount does not

• A) provide the purchaser with a cash saving.
• B) reduce the amount of cash received from a credit sale.
• C) increase a contra-revenue account.
• D) increase an operating expense account.

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Definitions:

MC = MR

This refers to the point where Marginal Cost equals Marginal Revenue, often used as a condition for profit maximization in economic theory.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, reflecting the total financial gain of a business beyond breaking even.

Perfect Competitors

Entities in a market where no single buyer or seller has the power to influence the market price due to the industry's homogeneous nature and the presence of many participants.

ATC

Average Total Cost, which is calculated by dividing the total cost of production by the quantity of output produced.