Your Firm Buys on Credit Terms of 2/10,net 45,and It

question 77

Multiple Choice

Your firm buys on credit terms of 2/10,net 45,and it always pays on day 45.If you calculate that this policy effectively costs your firm $157,500 each year,what is the firm's average accounts payable balance?

• A) $1,234,000
• B) $75,000
• C) $157,500
• D) $625,000
• E) $750,000

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Definitions:

Budgetary Control Accounts

Accounting tools used to compare actual financial performance with budgeted amounts, facilitating effective financial management and control.

Budgeted Expenditures

The estimated amount of money allocated for specific expenses in a future period as part of a budgeting process.

Budgeted Revenues

Estimated income that an organization forecasts to receive over a certain period according to its budget plan.

Children's Clubhouse

A facility or program designed to provide recreational, educational, or social activities for children in a safe and engaging environment.