When Recording an Early Payment Discount on Inventory Items, You

question 20

Multiple Choice

When recording an early payment discount on inventory items, you use the ________account.

• A)Purchases Discount
• B)Merchandise Discount
• C)Sales Discount
• D)Discount Expense

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Definitions:

Sales Commissions

A portion of sales revenue paid to sales employees as a reward for selling the company's products or services.

Net Operating Income

Earnings before interest and taxes (EBIT), representing the profit from normal business operations.

Fixed Expenses

Expenses that remain constant regardless of production or sales volumes, including items like rent, salaries, and insurance fees.

Selling Price

The amount a company charges for its product or service, set to cover costs and generate a profit.