Final answer:
The question is asking about merchandise balance and account balance in a business transaction. The merchandise balance is the initial amount of merchandise purchased on account, and the current account balance represents the amount owed to the creditor.
Step-by-step explanation:
The question is asking about the merchandise balance and current account balance in a business transaction. To calculate the merchandise balance, we need to know the initial amount of merchandise purchased on account, any returns or allowances, and any payments made within the given terms. The current account balance represents the amount owed to the creditor after considering any discounts or returns.
For example, if a business purchased $500 worth of merchandise on account with terms 2/10, n/30, it means that they can take a 2% discount if they pay within 10 days, and if not, the full amount is due within 30 days. The merchandise balance would be $500, and the current account balance would depend on whether the business takes the discount or pays within 30 days.