The Primary Reason for a Business to Allow Customers to Purchase

question 126

Multiple Choice

The primary reason for a business to allow customers to purchase goods or services on account is to:

• A)increase sales.
• B)increase cash flow from financing.
• C)decrease cost of goods sold.
• D)decrease the marketability of the company's inventory.

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Definitions:

Individual Asset

A single item of property, whether tangible or intangible, that is owned and has value to the entity holding it.

Liability Decreases

A reduction in the amounts owed by an entity to external parties or creditors.

Debit Balance

An account balance where the total debits exceed the total credits, often indicating the amount that a company or individual owes.

Credit Balance

A situation where the total credits in an account exceed the total debits, common in liability and revenue accounts.