How Should Taxes Collected in Advance in Fiscal Year 20X3

question 25

Multiple Choice

How should taxes collected in advance in fiscal year 20X3 be reported in the fiscal year 20X3 General Fund financial statements?

• A) As a liability on the balance sheet.
• B) As a deferred inflow on the balance sheet.
• C) As revenue on the statement of revenues, expenditures, and changes in fund balance.
• D) As an other financing source on the statement of revenues, expenditures, and changes in fund balance.

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Definitions:

Merchandise

Goods that are purchased, stored, and sold by a business in the ordinary course of its operations, often referred to as inventory.

Gross Profit Rate

The gross profit rate, also known as gross profit margin, is the ratio of gross profit (sales minus cost of goods sold) to sales, expressed as a percentage.

Merchandise Available

The total quantity of goods available for sale, including beginning inventory plus purchases made during the period.

Estimated Gross Profit

An approximate calculation of a company's gross profit, predicted based on past data and future projections.