ACCT ch5 practice test - Ch 5 ACCT practice test The...

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Ch 5 ACCT practice test The periodic inventory system is used more commonly by companies that sell: low-priced, high-volume merchandise Companies that sell low-priced, high-volume merchandise are more likely to use the periodic inventory system. It simply requires a physical count of items on hand at the end of the accounting period and no detailed records are kept of inventory during the accounting period. The perpetual inventory system is more time consuming and expensive because it keeps track of the purchase and sale of each item in inventory. Suppliers that sell merchandise on credit to a company can help alleviate their cash flow situation by providing financing for a period of time before payment is required. This period of time is: usually less than the operating cycle. This period of time is usually less than the operating cycle A company can help its cash flows by: purchasing merchandise from suppliers with longer payment terms. reducing credit terms for sales. reducing its financing period. doing all of these. Purchasing merchandise from suppliers with longer payment terms and reducing credit terms for sales both reduce the financing period. The financing period is the period the company is without cash for a series of transactions, so reducing the financing period helps cash flows. d. , doing all of these, is correct. Lexel Company sold goods for $1,000 with a 10 percent trade discount, terms 2/10, n/30. How much would Lexel receive if the account were paid within the discount period? $882 The full list price with no trade discount or sales discount is $1,000. The trade discount of 10% reduces the price of the goods to $900 [$1,000 - ($1,000 x 0.10)]. If the account were paid within the discount period, an additional 2% is subtracted from the $900 price and $882 [$900 - ($900 x 0.02)] would be received. A seller may offer a sales discount to:
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ACCT ch5 practice test - Ch 5 ACCT practice test The...

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