Short of Demanding Payments, What Sales Terms Could an Entrepreneur

question 47

Essay

Short of demanding payments, what sales terms could an entrepreneur choose in order to collect cash more quickly?

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Definitions:

LIFO

The "last in, first out" method of inventory valuation, where the most recently acquired items are considered sold first, used in periods of inflation to increase cost of goods sold and reduce taxes.

Periodic inventory system

An inventory accounting system where updates to inventory accounts are made periodically, typically at the end of a financial period, rather than after each transaction.

Ending inventory

The value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus cost of goods sold.

Periodic system

A periodic system is an inventory management approach where inventory levels and the cost of goods sold are calculated at the end of each accounting period, rather than continuously.