A Company Collects a Customer's Account Within the Discount Period

question 51

Multiple Choice

A company collects a customer's account within the discount period. Indicate how this transaction would affect the following five financial statement items:

• A) Option a
• B) Option b
• C) Option c
• D) Option d

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Definitions:

Retained Earnings Account

An equity account that represents the accumulated profits of a company that have not been distributed to shareholders as dividends.

Income Statement Account

An income statement account is a financial account that reflects income, expenses, gains, and losses over a period, used to calculate net income.

Stock Dividend

A distribution of additional shares of a company to its shareholders instead of paying cash dividends, often used to conserve cash while still rewarding investors.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which often bears no relation to its market value.