Which of the Following Statements Is FALSE

question 35

Multiple Choice

Which of the following statements is FALSE?

• A)The lower the discount percentage offered,the greater the cost of forgoing the discount and using trade credit.
• B)A firm should choose to borrow using accounts payable only if trade credit is the cheapest source of funding.
• C)A firm should always pay on the latest day allowed.
• D)A firm should strive to keep its money working for it as long as possible without developing a bad relationship with its suppliers or engaging in unethical practices.

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Definitions:

Perpetual Inventory System

An accounting system that records inventory purchases or sales immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Merchandise Return

Occurs when a customer returns a product to the seller for a refund, exchange, or credit, affecting the seller’s inventory and sales figures.

State Sales Tax

A tax imposed by state governments on the sale of goods and services, which varies by state and is collected by businesses at the point of sale.

Sales Tax Payable

A liability account in the general ledger that stores the amount of sales tax collected from customers, which is owed to the government.