Which of the Following Should Not Be Included in Inventory

question 115

Multiple Choice

Which of the following should not be included in inventory cost for a car dealership?

• A)The costs of transporting the cars from the factory to the dealership
• B)Cost of new car preparation for customers
• C)The salary and commission of the salesman who sells the vehicle
• D)The cost of adding a CD player to the vehicles before the vehicle is offered for sale

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Definitions:

Nontrade Receivables

Amounts owed to a business that are not related to the sale of goods or services, such as tax refunds, advances to employees, or insurance claims.

Company Officers

Executives appointed by the board of directors responsible for managing the day-to-day operations and making major corporate decisions.

Direct Write-Off Method

The method of accounting for uncollectible receivables that recognizes an expense only when an account is determined to be worthless.

Allowance Method

The method of accounting for uncollectible receivables that recognizes an expense by estimating future uncollectible accounts at the end of the accounting period.