Which One of the Following Assumptions Is Made When Declaring

question 88

Multiple Choice

Which one of the following assumptions is made when declaring that the break-even probability of collection is lower for customers with repeat orders?

• A) The discount rate is fairly high.
• B) The cost of the item will continually decline.
• C) The sales price of the item will continually increase.
• D)Payment on the first order ensures payments on subsequent orders.

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Definitions:

Cash Payback Period

The time period required for the cash inflows from a capital investment project to cover the initial cash outlay.

Net Cash Inflow

The surplus of cash revenues over cash expenses in a given period, indicating the liquidity added to an entity.

Useful Life

The estimated duration for which an asset is expected to be functional and economically feasible for its intended purpose.

Annual Operating Income

The profit earned from a firm's normal core business operations, excluding deductions of taxes and interest charges.