The credit terms 2/10, n/30 mean that a:
Explanation
Credit terms like 2/10, n/30 are a shorthand way to communicate the sales discount available to the buyer. The first number is the discount percentage, the second is the discount period in days, and 'n' stands for the net (full) amount due within the final number of days.
Other questions
What are the two main categories of expenses for a merchandising company that distinguish it from a service company?
Under a perpetual inventory system, when is the cost of goods sold determined?
What does the freight term 'FOB shipping point' indicate?
When a buyer incurs transportation costs under a perpetual system, how are these costs recorded?
A credit sale of $1,000 is made on June 1, terms 2/10, n/30. A return of $200 is granted on June 5. What is the amount of cash received if payment is made in full on June 9?
What is the primary purpose of using contra revenue accounts like Sales Returns and Allowances and Sales Discounts?
Which of these accounts is closed to the Income Summary account in a merchandising company?
In a multiple-step income statement, what is calculated by subtracting cost of goods sold from net sales?
Which of the following is an example of a nonoperating activity?
A company using a perpetual inventory system has an unadjusted balance of $40,500 in its Inventory account. A physical count reveals the actual inventory on hand is $40,000. The adjusting entry will include a:
On a multiple-step income statement, how is 'Income from operations' calculated?
In a perpetual inventory system, the journal entry to record the return of damaged goods from a buyer (for which credit was granted) would include a:
How is the cost of goods available for sale calculated under a periodic inventory system?
In a single-step income statement, which of the following would be included in the 'Revenues' section?
If a company's net sales are $510,000 and its gross profit is $180,000, what is its cost of goods sold?
Under the periodic inventory system, which account is used to record the purchase of merchandise for resale?
On a worksheet for a merchandising company using a perpetual system, how would Sales Revenue be extended from the adjusted trial balance?
If a buyer returns damaged merchandise purchased on account under a perpetual system, the buyer will record a credit to which account?
What is the correct formula to calculate Net Sales?
PW Audio Supply had sales revenue of $480,000, sales returns and allowances of $12,000, and sales discounts of $8,000. Its net sales are:
The operating cycle of a merchandising company is ordinarily:
In a single-step income statement, how would Freight-Out be classified?
The journal entry for a cash sale under a perpetual system requires a:
Beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000. What is the cost of goods sold?
Which closing entry is unique to a merchandising company using a periodic system compared to a service company?
In a perpetual system, what is the impact of a purchase discount on the buyer's accounts?
The single-step income statement is favored by some because:
If net sales are $400,000, cost of goods sold is $310,000, and operating expenses are $60,000, what is the gross profit?
In the closing entries for a merchandising company, Sales Returns and Allowances is closed with a:
Which of the following accounts is used under a periodic system but not under a perpetual system?
In the context of the flow of costs, what does 'cost of goods available for sale' represent?
A key advantage of the perpetual inventory system over the periodic system is that it:
In the closing entry for a merchandising company, which of the following accounts would be credited to close it to Income Summary?
On the balance sheet of a merchandising company, inventory is classified as:
If beginning inventory is $36,000, net purchases are $307,800, and freight-in is $12,200, what is the cost of goods purchased?
Which of the following accounts would appear in the closing entries of a service company but NOT a merchandising company?
What is the primary motivation for a seller to offer a sales discount?
In a multiple-step income statement, where is Interest Revenue typically reported?
If a company has a gross profit of $144,000 and operating expenses of $114,000, its income from operations is:
The journal entry to record freight costs paid by the seller on outgoing merchandise would include a:
Which of the following items is NOT included in the calculation of cost of goods purchased under a periodic system?
If a company has purchases of $325,000, purchase returns of $10,400, and purchase discounts of $6,800, its net purchases are:
On the worksheet for a company using a periodic system (Appendix 5B), the ending inventory amount appears in the:
On the worksheet for a company using a periodic system (Appendix 5B), how is the beginning inventory balance extended?
In a perpetual inventory system, a return of non-defective goods to the seller for credit results in which entry for the seller?
If a company's gross profit rate is 30 percent, and its net sales for the period are $500,000, what is the estimated cost of goods sold?
On a worksheet for a merchandising company, the Cost of Goods Sold account is extended to which column?
Which of the following would NOT be considered a merchandising company?
The closing entries for a merchandising company's sales-related accounts would involve debiting: