The Journal Entry to Record Taking a Discount When Paying

question 189

Multiple Choice

The journal entry to record taking a discount when paying for goods previously purchased on account:

• A)decreases assets and liabilities.
• B)increases assets and stockholders' equity.
• C)decreases liabilities and increases in stockholders' equity.
• D)decreases assets and stockholders' equity.

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Definitions:

Break-Even Point

The point at which total costs and total revenue are equal, resulting in no net gain or loss.

Variable Cost

A cost that changes in proportion to the level of output or activity.

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor.

Contribution Margin

The selling price per unit, minus the variable cost per unit, used to determine the profitability of products or services.