If the vendor allows a discount when the invoice is paid within a specified number of days, this is known as:

Question

BlackTom AI · Accepted Answer

To understand this question, start by identifying what a discount for paying an invoice within a specified period is generally called in accounting terms.
Option 1: The terms of sale. This is the set of conditions under which a sale is made, including payment terms such as discounts for early payment, due dates, and other obligations. The early payment discount is typically described within the terms of sale, so this option correctly aligns with the concept described in the question.
Option 2: An accrued expense. Accrued expenses are liabilities representing costs that have been incurred but not yet paid, such as wages earned by employees but not yet paid. This term does not describe a discount structure tied to payment timing.
Option 3: The subtotal. The subtotal is the sum of item amounts before taxes, discounts, and other charges. It is a mathematical intermediate total and does not refer to any payment discount arrangement.
Option 4: The cost of goods sold. COGS represents the direct costs attributable to the production of goods sold by a company, including materials and labor. It is a cost item on the income statement, not a description of payment terms or discounts.
In practical accounting and business practice, early payment discounts are described as part of the vendor’s payment terms, which are encompassed by the term "terms of sale." Therefore, the statement that the described arrangement is known as the terms of sale is the most accurate interpretation among the given options.

BBK99E1 - Basic Bookkeeping Level 1 Part 2 - Online Exam

If the vendor allows a discount when the invoice is paid within a specified number of days, this is known as:

View Explanation

Log in for full answers

Similar Questions

Referring to the A/R Terms report printed in Step 4 of the Practical Exam, how many days from the invoice date is the discount applicable for the Term Code 5N45?

_________ are used to calculate due dates and discount dates of transactions.

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

Under the assumptions used in cost-volume-profit analysis, as the activity increases:

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler