April Purchases $18,000 of Goods from Lin on Thirty Days

question 42

Multiple Choice

April purchases $18,000 of goods from Lin on thirty days' credit,and Lin assigns the account to Indra.If April finds the goods defective and only worth $16,000:

• A) she has no defense against full payment since the account was assigned.
• B) she only needs to pay Indra $16,000 if Indra had notified her of the assignment.
• C) Indra is entitled to the full $18,000 since she acquires rights greater than those of Lin,who assigned the contractual rights to payment.
• D) she must pay $16,000 directly to Lin regardless of whether Indra notified her of the assignment.

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Definitions:

Inventory Balance

The total value of a company's inventory at the end of an accounting period, including raw materials, work-in-progress, and finished goods.

Perpetual Inventory System

A Perpetual Inventory System continuously updates inventory records and cost of goods sold every time a transaction occurs, providing real-time inventory information.

FIFO Method

An inventory valuation method that assumes the first items placed into inventory are the first sold, standing for "First In, First Out."

Periodic System

An accounting method where inventory updates are made on a periodic basis, usually at the end of a reporting period, rather than after each transaction.