Redwing Company sold inventory costing $500 to a customer on account for $700.Which of the following correctly describes the collection of $686 cash when the customer takes advantage of a sales discount?

A) Operating expenses increase $14.
B) Accounts receivable decreases $686.
C) Current assets decrease $14.
D) Gross profit is not affected.

Sales Discount

A Sales Discount is a reduction in the price of a product or service offered by a seller, typically to incentivize prompt payment by the buyer.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business.

Gross Profit

The revenue remaining after deducting the cost of goods sold from total sales revenue, indicating the efficiency of a company in managing its production and labor costs.