When a Discount Is Taken for Prompt Payment Under a Periodic

question 163

Multiple Choice

When a discount is taken for prompt payment under a periodic inventory system, the purchaser would credit:

• A)Accounts Payable.
• B)Accounts Receivable.
• C)Purchases Discounts.
• D)Inventory.

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Definitions:

Payout Ratio

The proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage of the company's total net income.

Cost Of Goods Sold

Costs that are directly incurred in the process of producing goods for sale by a company, such as labor and material expenses.

Selling And Administrative Expenses

Costs incurred by a company that are not directly tied to a specific product or service's production but are necessary for running the business.