An Expense Resulting from Failing to Take Advantage of Cash

question 70

Multiple Choice

An expense resulting from failing to take advantage of cash discounts when using the net method of recording purchases is called:

• A)Sales discounts.
• B)Trade discounts.
• C)Purchases discounts.
• D)Discounts lost.
• E)Discounts earned.

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Definitions:

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, indicating the annual return that makes the net present value of all cash flows from a particular project equal to zero.

Cash Flows

The sum of cash flowing in and out of a company, particularly influencing its available cash assets.

Internal Rate of Return

The interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.

Net Present Value

A financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.