A Company Purchased $6,000 of Merchandise on Credit with Terms

question 197

Multiple Choice

A company purchased $6,000 of merchandise on credit with terms 4/15,n/30.How much will be debited to Accounts Payable if the company pays $800 cash on this account within 10 days?

• A)$833.33
• B)$800.00
• C)Nothing will debited to Accounts Payable; the account should be credited in this situation.
• D)$5,760.00
• E)$5,333.33

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Definitions:

Financial Leverage

The use of borrowed money (debt) to amplify the potential returns from an investment.

EBIT-EPS Analysis

A tool used to determine the impact of different levels of debt on a company's earnings before interest and tax (EBIT) and earnings per share (EPS).

Leverage

The use of borrowed funds to finance the purchase of assets or increase the potential return of an investment.

Management Effectiveness

A measure of how well a company's management team utilizes resources to generate profits.