Which of the Following Is a TRUE Statement Regarding Sales

question 126

Multiple Choice

Which of the following is a TRUE statement regarding sales?

• A)Sales revenue recognized in a particular period must be reduced by an amount for estimated sales returns.
• B)For the sale of products, the performance obligation is generally satisfied when the customer orders the goods.
• C)Sales returns and allowances increase a company's profit.
• D)If customers return merchandise within the refund period, the Sales Returns account is credited.

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Definitions:

Factory Labor

Workforce involved in producing goods within a factory setting, often comprising a significant portion of production costs.

Manufacturing Overhead Applied

The charging of manufacturing overhead costs to units produced, usually based on a predetermined overhead rate, including costs not directly tied to production like rent and utilities.

Overapplied Overhead

Occurs when the allocated or applied overhead for a product exceeds the actual overhead expenses incurred.

Underapplied Overhead

Refers to the situation where the allocated amount of overhead costs in the cost accounting process is less than the actual overhead costs incurred.