Touch Tronix, Inc

question 86

Multiple Choice

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.On December 10, 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Terms of the sale were 2/10, net 30.On December 18, 2011, Advanced Communications, Inc.paid the account in full.Advanced Communications, Inc.uses a perpetual inventory system.Which of the following is true regarding the impact on the statement of financial position for Advanced Communications, Inc.when the payment is made on December 18, 2011?

• A)Assets decreased by €880,000.
• B)Assets increased by €17,600.
• C)Liabilities decreased by €862,400.
• D)Liabilities decreased by €680,000.

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Definitions:

Holding-Period Return

The total return received from holding an asset or portfolio of assets over a period, typically expressed as a percentage.

Effective (Annualized) Yield

A calculation of the annual return on an investment, taking into account the effect of compounding interest.

Consumer Price Index

An index that measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Effective Annualized Rate

The interest rate on an investment or loan on an annual basis, taking compounding into account.