Assume the Perpetual Inventory System Is Used

question 99

Multiple Choice

Assume the perpetual inventory system is used.1) Green Company purchased merchandise inventory that cost $64,000 under terms of 2/10, n/30 and FOB shipping point.2) Green Company paid freight cost of $2,400 to have the merchandise delivered.3) Payment was made to the supplier on the inventory within 10 days.4) All of the merchandise was sold to customers for $94,000 cash and delivered under terms FOB destination with freight cost amounting to $1,600.What is the net cash flow from operating activities that results from these transactions?

• A)$94,000 inflow
• B)$27,280 inflow
• C)$66,720 outflow
• D)$31,280 inflow

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Definitions:

Higher Yield

Refers to investments offering a greater return in terms of interest or dividends, often accompanied by higher risk.

Effective Annual Rate

The interest rate on an investment or loan that reflects the actual annual rate of interest, accounting for compounding over a given period.

Semi-Annual Interest Payments

Interest disbursements made twice a year on a loan or bond.

Coupon

The interest payment a bondholder receives from the bond's issuer at the coupon's interval.