Future Business Leaders of America (FBLA) Accounting Practice Test

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Prepare for the FBLA Accounting Test with practice quizzes and comprehensive questions. Each question is designed to help deepen your understanding and enhance your readiness for the exam. Are you ready to excel?

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What does the term 'credit terms' influence in a business transaction?

The pricing strategy of the product
The method and duration of payment
The type of merchandise sold
The sales tax rate applied

The correct answer is: The method and duration of payment

The term 'credit terms' specifically influences the method and duration of payment in a business transaction. This phrase refers to the conditions under which credit is extended to customers, detailing aspects such as how long a customer has to pay for their purchase (the payment period) and the specific payment methods acceptable. For example, credit terms might state that payment is due in 30 days or that a discount is applied if payment is made within a certain timeframe. These terms are essential for managing cash flow and ensuring timely payments, and they can directly impact a company’s financial health. In the context of the other options, while the pricing strategy and the type of merchandise sold may be affected by various factors, they are not directly influenced by credit terms. Sales tax rates are determined by jurisdictional regulations and do not relate to credit terms either. Thus, focusing on the payment method and duration directly ties into what credit terms encompass, making this the correct answer.