Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

Which account is affected both when a sales discount is granted and when cash is collected from a customer?

Sales Revenue

Accounts Payable

Inventory

Accounts Receivable

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Verified step by step guidance

Understand the concept of Accounts Receivable: This account represents the amount of money owed to the company by customers for goods or services provided on credit. It is affected when transactions related to customer payments or adjustments occur.

Recognize the impact of a sales discount: A sales discount is a reduction in the amount owed by a customer if payment is made within a specified period. When a sales discount is granted, the Accounts Receivable balance is reduced to reflect the discounted amount owed by the customer.

Identify the effect of cash collection: When cash is collected from a customer, the Accounts Receivable account is reduced because the customer has paid off part or all of their outstanding balance.

Connect the two scenarios: Both granting a sales discount and collecting cash from a customer directly affect the Accounts Receivable account, as they involve adjustments to the amount owed by the customer.

Review the correct answer: Based on the explanation above, the account affected in both scenarios is Accounts Receivable, as it tracks the changes in amounts owed by customers due to discounts and payments.