A Company Sells Merchandise on a Deferred Payment Plan,ultimately Receiving

question 109

Multiple Choice

A company sells merchandise on a deferred payment plan,ultimately receiving $5,000 on the account receivable.On the payment date,the company would

• A) credit Accounts Receivable for less than $5,000.
• B) debit Interest Income for the imputed amount.
• C) credit Sales for less than $5,000.
• D) debit the asset account for $5,000.

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Definitions:

Economic Profits

Refers to the financial gains that exceed the total costs, including both explicit and implicit costs, of a business.

Enter Industry

The act of starting or initiating business operations in a particular market sector.

Long Run

The long run is a time period sufficiently long that all factors of production and costs can be fully adjusted, including plant sizes, machinery, and entry or exit from an industry.

Monopolistically Competitive

A market structure where many firms sell similar but not identical products, allowing them some power to influence prices.