discount revenue leads to an...

decrease in liabilities, and increase in owner's equity

paying early and receiving discount revenue increases owner's equity because

the businesses reduces the outflows from the business and increases profit

the formula for discount revenue is as follows

discount revenue = discount rate * amount owing

what is meant by the term settlement discount?

a reduction in the amount paid by credit customer for early payment

which of the following is not a benefit of early payment to accounts payable

less time to generate cash from sales

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Accounting unit 2, AOS2

12 termsStudBud Administration18 plays

This Quiz is quiz assessing students ability to respond to calculations for discount revenue, GST impacts and the costs and benefits of early repayment

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Questions 12

Answers

1
discount revenue leads to an...
decrease in liabilities, and increase in owner's equity
decrease in liabilities, with no change in owner's equity
increase in liabilities, with no change in owner's equity
increase in liabilities, and decrease in own'er equity
2
discount revenue earned would decrease both liabilities and owner's equity in a business?
False
True
3
paying early and receiving discount revenue increases owner's equity because
a business can use the money saved in profit-generating activities
earns additional monies from not paying back suppliers as much
the businesses reduces the outflows from the business and increases profit
the businesses has a larger bank balance which is a result of more profit
4
the seller offers credit terms of 3/10, n/60 on a $3200 purchase, what discount is achievable?
96
90
320
960
5
the formula for discount revenue is as follows
discount revenue = discount rate * amount owing
discount revenue = amount owing * number of items purchased
discount revenue = number of days to pay * discount rate * amount owning
discount revenue = discount rate * number of items purchased
6
what is meant by the term settlement discount?
additional funds charged by supplier for late repayment
the terms and conditions for payment included on a purchase order
paying the amount owed to a supplier for a credit purchase
a reduction in the amount paid by credit customer for early payment
7
discounts achieved in accounts payable is an example of benefits for early repayment
False
True
8
What is the maximum number of days a supplier will allow businesses to repay with credit terms: 5/7, n/60
5 days
7 days
35 days
60 days
9
2/7, n/30 means that you receive 7% discount within 2 days of payment and must repay within 30 days
True
False
10
if suppliers offer 6% discount on all payments made within the first week, what would be the discount on $2340
$144.44
$2199.60
$144.00
$140.40
11
which of the following is not a benefit of early payment to accounts payable
builds stronger relationships with suppliers
less cash is paid to accounts payable
less time to generate cash from sales
net profit is increased
12
what would inventory worth $1120 be discounted to if suppliers offered 5% earlier repayment discounts?
$1046
$1064
$56
$1055

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