Which of the Following Does Not Correctly Describe the Effect

question 101

Multiple Choice

Which of the following does not correctly describe the effect of a credit card discount?

• A)Net sales decrease and gross profit decreases.
• B)Net sales decrease and net income decreases.
• C)Operating expenses remain the same and net income decreases.
• D)Neither operating expenses, nor net income is affecteD.The credit card discount account is a contra-revenue account, which reduces net sales, gross profit, and therefore net income.

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Definitions:

Foreign Currency

Money or other forms of currency issued by governmental or monetary authorities of countries other than one's own.

Foreign Goods

Products and services that are produced in other countries and then imported into the domestic market.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to determine their relative purchasing power.

Exchange Rate

The price of one country's currency expressed in the currency of another country, facilitating international trade and investment.