To Obtain the Maximum Possible Benefit from a Cash Discount

question 65

Multiple Choice

To obtain the maximum possible benefit from a cash discount of 2/10, n/30, the buyer should pay the invoice:

• A) immediately.
• B) on the last day of the discount period, i.e. in 10 days.
• C) at the end of the month.
• D) when the seller threatens legal action.

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Definitions:

Unearned Subscription Revenue

Unearned Subscription Revenue is income received by a company for goods or services yet to be provided, recorded as a liability on the balance sheet.

Subscription Revenue

Income generated from customers paying recurrent fees for access to a product or service over a period of time.

Accounting Equation

Assets = Liabilities + Owner’s Equity.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, usually a fiscal quarter or year, to calculate net income.