Tim O'Brien Gets the Invoice for a Load of Gravel

question 186

Multiple Choice

Tim O'Brien gets the invoice for a load of gravel he purchased last week. The price of the gravel was $55, and the terms are 2/10, n/45. If Tim pays the invoice in five weeks, he will owe

• A)a penalty.
• B)$53.90.
• C)$56.10.
• D)$58.30.
• E)$55.00.

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Definitions:

Ending Inventory

The total value or amount of goods available for sale at the end of an accounting period, calculated using inventory accounting methods.

Average Inventory

A financial measure used to estimate the value of inventory over a certain period, calculated by averaging the inventory levels at various points.

Cost Of Goods Sold

An accounting term referring to the direct costs attributable to the production of the goods sold by a company, including materials and labor.

Inventory Turnover

The number of times the average inventory is converted into sales during the year.