Which of the Following Statements Is Correct

question 272

Multiple Choice

Which of the following statements is correct?

• A) The credit period is the length of time for which a discount can be taken.
• B) Trade credit terms are set by the buyer.
• C) Trade credit is classified as a liability for the seller.
• D) A cash discount is generally offered to slow down payment of invoices.
• E) The invoice date is the beginning of the credit period.

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Definitions:

Asset Turnover

A ratio that measures the efficiency of a company's use of its assets in generating sales revenue.

Financial Statement Presentation

The method of organizing and presenting financial data of a company in its financial statements, according to accounting standards.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since its acquisition.

Asset Turnover Ratio

A ratio measuring how effectively a business uses its assets to produce sales income.