A Firm's Credit Terms Specify "1/10 Net 30" and the Accounts

question 52

Multiple Choice

A firm's credit terms specify "1/10 net 30" and the accounts receivable days outstanding is 32 days. Which of the following can be concluded on the basis of this information?

• A) Most customers pay on time.
• B) The average customer pays two days late.
• C) All customers have paid within 32 days of purchase.
• D) All customers pay late.

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Definitions:

FIFO vs. LIFO

A comparison between two inventory valuation methods: First-In, First-Out (FIFO), where goods first bought are the first to be sold, and Last-In, First-Out (LIFO), where goods most recently bought are the first to be sold.

P/E Ratios

The price-to-earnings ratio, a valuation metric for stocks calculated by dividing the current market price of a stock by its earnings per share.

Macroeconomic Variables

Economic indicators that represent the overall health and performance of an economy, such as GDP, inflation rates, and unemployment rates.

Inflation

The rate at which prices for commodities and services overall ascend, depleting the power of purchase.