The Collection of a $2,000 Account Beyond the 2 Percent

question 138

Multiple Choice

The collection of a $2,000 account beyond the 2 percent discount period would result in a(n)

• A)increase to Cash for $1,960.
• B)decrease to Accounts Receivable for $2,000.
• C)decrease to Cash for $2,000.
• D)increase to Sales Discounts for $40.

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Definitions:

Allowance for Doubtful Accounts

An accounting provision made by a company to account for customers who may not be able to make required payments, affecting the accounts receivable balance.

Accounts Receivable

Money owed to a company by its customers for products or services that have been delivered but not yet paid for.

Adjusting Entry

An accounting journal entry made at the end of a period to record any unrecognized income or expenses for that period, ensuring accuracy of the financial statements.

Maturity Value

The amount to be paid to the holder of a financial instrument at its maturity date.