Abigail's Hobby Is Sculpting

question 125

Multiple Choice

Abigail's hobby is sculpting.During the current year,Abigail sold three of her sculptures for a total of $3,200.Her related expenses include $1,500 in utilities,$1,200 in supplies and $900 in depreciation.Of the total expenses incurred,Abigail may deduct

• A)$0.
• B)$1,500 in utilities and $1,200 in supplies.
• C)$1,500 in utilities,$1,200 in supplies,and $500 in depreciation.
• D)$1,500 in utilities,$1,200 in supplies and $900 in depreciation.

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Definitions:

Accounts Receivable

Accounts Receivable represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Credit Sales

Sales made by a business where the payment is delayed, typically documented with an invoice and recorded in accounts receivable.

Receivables Financing

A type of financing where a company uses its accounts receivable as collateral to secure short-term financing, improving liquidity.

Operating Cycle

The time period between the acquisition of inventory by a business and the collection of cash from accounts receivable.