Which One of the Following Statements Regarding Sales Discounts Is

question 27

Multiple Choice

Which one of the following statements regarding sales discounts is correct?

• A) If a company offers a discount to encourage prompt payment and the discount is taken, the discount reduces the amount of net sales.
• B) Credit terms of "2/10, n/30" mean that if payment is made in two days, a 10% discount may be taken; if not paid within two days, the full invoice price will be due in thirty days.
• C) The terms "sales discounts" and "sales credits" are used interchangeably by a company.
• D) The Sales Discounts account is an expense account.

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Definitions:

Perfectly Inelastic

Describing demand that is entirely unresponsive to price changes, represented by a vertical demand curve.

Oysters

Marine mollusks known for their hard shells and edible flesh, often considered a delicacy.

Price Elasticity

An indicator of the sensitivity of the demand for a product to variations in its price.

Perfectly Inelastic

A situation where the demand for a product does not change in response to changes in price, illustrated by a vertical demand curve.