Discounts Given for Early Payment of Credit Purchases of Capital

question 5

Multiple Choice

Discounts given for early payment of credit purchases of capital assets should be:

• A) recorded as interest expense at purchase date.
• B) capitalized as a cost of the asset acquired and subsequently allocated to amortization expense.
• C) recorded as interest revenue at purchase date.
• D) deducted from the invoice price when determining the cost of the asset.

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Definitions:

Equilibrium

A state in a chemical reaction where the rates of the forward and reverse reactions are equal, leading to no overall change in the concentration of reactants and products.

Catalyst

A substance that increases the rate of a chemical reaction without being consumed or permanently altered in the process.

Equilibrium Constant

A numerical value that expresses the ratio of concentrations of products to reactants at equilibrium for a reversible chemical reaction at a constant temperature.

Reactants

Substances initially present in a chemical reaction that are consumed during the reaction to make products.