When a Company Orders Goods for Resale, What Is the Accounting

question 20

Multiple Choice

When a company orders goods for resale, what is the accounting entry?

• A) DR Cash
• CR Accounts payable
• B) DR Purchases
• CR Accounts payable
• C) DR Inventory
• CR Accounts payable
• D) No accounting entry is required yet

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Definitions:

Discounted Value

The present value of a future amount of money or stream of cash flows given a specified rate of return.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid by the borrower to the lender for the use of their funds.

Future Consumption

The concept of saving resources or income in the present in order to consume or utilize in the future, reflecting economic planning and saving behavior.

Present Value

The current worth of a future sum of money or flow of cash flows given a specified rate of return.