If Merchandise Bought on Account Has a List Price of $5,000

question 91

Multiple Choice

If merchandise bought on account has a list price of $5,000, with a trade discount of 25% and credit terms of 1/10, n/30, what is the amount to be credited to Accounts Payable?

• A) $5,000
• B) $3,750
• C) $3,712.50
• D) $3,787.50

Grasp the concept of unused capacity and its implications in ABC.

Appreciate the role of cost pools in ABC and their impact on cost allocation.

Understand how ABC affects decision making regarding product design and profitability.

Learn to apply ABC in different organizational contexts and for various overhead costs.

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Definitions:

Approved Vouchers

Documents that have been verified and authorized for payment because they accurately reflect the goods or services received.

Bank Reconciliation

The process of matching and comparing figures from accounting records against those presented on a bank statement to ensure accuracy.

Voucher System

A method of internal business control that involves a documented process for making disbursements and controlling expenditures.

Invoice Approval

The process of reviewing and verifying an invoice before it is paid to ensure that the charges are accurate and the goods or services were received.