When an Inventory Item That Cost $75 Is Sold on Account

question 39

Multiple Choice

When an inventory item that cost $75 is sold on account for $100, which of the following would be included in the journal entry recording the cost of goods sold?

• A)Dr.Cash $100
• B)Cr.Cost of goods sold $75
• C)Cr.Accounts Receivable $100
• D)Cr.Inventory $75

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Definitions:

Economics Definition

The study of how societies use scarce resources to produce valuable commodities and distribute them among different people.

Equilibrium

A market phase where demand is matched by supply, which in turn stabilizes prices.

Limited Resources

The scarcity of resources in comparison to the potentially limitless wants and needs, forcing the need for allocation decisions.

Capacity Utilization Rate

The percentage of a firm's total possible production capacity that is actually being used over a given period.