Reduction from the Invoice Price for Prompt Payment as Recorded

question 29

Multiple Choice

Reduction from the invoice price for prompt payment as recorded on the books of the buyer

• A)Purchases discount
• B)Cash discount
• C)Trade discount
• D)Credit terms
• E)Cash payments journal
• F)Promissory note
• G)Cash receipts journal
• H)Credit Card Expense
• I)Credit period
• J)Sales discount

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Definitions:

Overhead Rate

The ratio used to allocate overhead costs to products or services, often based on direct labor hours or costs.

Direct Labor

The cost of wages, salaries, and benefits for employees directly involved in the production of goods or services.

Raw Materials Inventory

The total cost of all the materials that are used in the production of goods, not yet processed or in the production process.

Job-Order Costing

An accounting method that assigns costs to specific units or batches of production, allowing for detailed tracking of expenses.