What Account Increases When Raw Materials Are Purchased on Account

question 2

Multiple Choice

What account increases when raw materials are purchased on account?

• A)expenses
• B)liabilities
• C)equity
• D)revenue

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Definitions:

Income Before Taxes and Interest

Net earnings of a company before accounting for interest and tax expenses, used to analyze operating performance without financing or tax influences.

Accounts Receivable Turnover

A financial ratio that measures how many times a company can turn its accounts receivable into cash within a specific period.

Account Receivables Balance

The total amount of money owed to a company by its customers for goods or services delivered on credit.

Net Credit Sales

The total revenue from sales made on credit, minus returns and allowances, during a specific period.