Which of the Following Is a Difference Between a Sale

question 36

Multiple Choice

Which of the following is a difference between a sale or return contract and a sale on approval contract?

• A) For sale or return, the risk of loss is borne by the buyer; while in a sale on approval, it is borne by the seller.
• B) For sale or return, the goods are sold to the buyer; while in a sale on approval, the buyer is allowed a time period to test the goods.
• C) For sale or return, failure to notify rejection is not acceptance; while in a sale on approval, failure to notify rejection is acceptance.
• D) For sale or return, goods sold can be returned; while in a sale on approval, goods sold can never be returned.

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Definitions:

Direct Labor Cost

The salaries given to employees who are directly engaged in manufacturing products or providing services.

Finished Goods

Products that have completed the manufacturing process but have not yet been sold or distributed to the end user.

Indirect Materials

Materials used in the production process that are not directly traceable to individual products or are not cost-effective to trace, such as lubricants and cleaning supplies.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities and maintenance expenses.