Consider the Following Short Case as You Respond to the Question

question 5

Multiple Choice

Consider the following short case as you respond to the question: VLC Corporation sold merchandise with a cost of $200 on account for $300 to PRT Corporation; credit terms were 2/10, n/30.VLC paid the outgoing freight charge of $10.PRT paid the invoice within the discount period.Considering all entries VLC would make in its AIS to record all the preceding transactions, how many different income statement accounts would be involved?

• A)Three
• B)Four
• C)Five
• D)More than five

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Definitions:

Discount Rate

The rate of interest the Fed charges to loan money to any banking institution to meet reserve requirements.

Economic Activity

Actions that involve the production, distribution, and consumption of goods and services at all levels within a society.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.

Glass-Steagall Act

A U.S. law enacted in 1933, designed to prevent commercial banks from engaging in investment banking, thereby protecting depositor funds from risky market investments.