Which of the following in NOT a potentialbenefit of granting trade credit?May allow quicker movement of inventory.O Enhances competitiveness for the firm grantingcredit.A delay in receiving payment from customers.May assist in generating additional sales.

Trade credit is a business arrangement where a seller allows a buyer to purchase goods or services…

Which of the following in NOT a potential benefit of granting trade credit? O May allow quicker movement of inventory. Enhances competitiveness for the firm granting credit. A delay in receiving payment from customers. O May assist in generating additional sales.

Which of the following in NOT a potential benefit of granting trade credit? O May allow quicker movement of inventory. Enhances competitiveness for the firm granting credit. A delay in receiving payment from customers. O May assist in generating additional sales.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 8CYBK

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Question

Which of the following in NOT a potential
benefit of granting trade credit?
May allow quicker movement of inventory.
O Enhances competitiveness for the firm granting
credit.
A delay in receiving payment from customers.
May assist in generating additional sales.

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Which of the following refers to the ability of a firm to buy repeatedly from a supplier on trade credit without re-applying for credit? Select one: a. Net terms b. Cash discount c. Open account d. Present value of delayed payment
Is it true that, when one firm sells to another on credit, the seller records the transaction as an account receivable while the buyer records it as an account payable and that, disregarding discounts, the receivable typically exceeds the payable by the amount of profit on the sale?
If the net present value associated with extending trade credit to a customer is positive, the selling firm should_______ ? Select one: O a. Ask him to buy from competitors O b. Not fill the order c. None of the options O d. Fill the order
Requirement a. What are the accounting requirements for a correct sales cutoff? A. A shipment should be recorded as a sale when the risks of ownership transfer to the buyer and collectability is reasonably assured. B. A shipment should be recorded as a sale when the merchandise is shipped. C. A shipment should be recorded as a sale when the payment for the merchandise has beeb received by the seller. D. A shipment should be recorded as a sale when the merchandise is received by the purchaser.
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What are the reasons that a company gives trade discounts?Why are trade discounts not recorded in theaccounts like cash discounts?
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Which of the following is indicative of discounts received from a supplier on account of early settlement of an amount owed as a result of a credit purchase? a) Quantity discount b) Value discount c) Early settlement discount