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.

Understand the impact of risk aversion and investment financing options on the required rate of return.

Describe the relationship between dividend growth rates and the cost of external equity capital.

Understand the differences between the cost of debt and the cost of equity and their implications for the WACC.

Comprehend how corporate tax rates influence the after-tax cost of debt and WACC.