The Amount of Time It Takes a Business to Earn

question 2

Multiple Choice

The amount of time it takes a business to earn back the funds it paid out to obtain a capital asset is referred to as the _____.

• A) payback period
• B) synodic period
• C) chargeback period
• D) grace period

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Definitions:

Prepaid Expenses

Costs paid in advance for services or goods to be received in the future, recognized as assets on a balance sheet until they are consumed or used.

Liabilities

Financial debts or obligations that arise during the course of business operations, owed by a company to another entity.

Accounts Receivable

Funds that customers are yet to pay to a company for products or services already provided.

Credit Sales

Sales made by a business where payment is delayed, allowing the buyer to purchase goods or services on credit.