JJ Company Purchased on Account Merchandise with a List Price

question 162

Multiple Choice

JJ Company purchased on account merchandise with a list price of $10,000. Payment terms were 1/15, n/45. If payment occurs before the discount expires, what is the effect of the sales discount on the balance sheet?

• A)Decreases accounts receivable
• B)Decreases inventory
• C)Increases accounts payable
• D)Increases cash

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Definitions:

Correlation Coefficient

A numerical measure that assesses the strength and direction of a linear relationship between two quantitative variables.

Covariance Value

A measure indicating the extent to which two variables change together, showing if increases in one variable correspond to increases in another.

Correlation Coefficient

A quantitative indicator showing both the magnitude and direction of a linear association between a pair of variables.

Linear Relationship

A type of association where changes in an independent variable result in proportional changes in a dependent variable, represented by a straight line in graph form.