The Credit Balance That Arises When a Net Loss on a Purchase

question 56

Multiple Choice

The credit balance that arises when a net loss on a purchase commitment is recognized should be

• A)presented as a current liability.
• B)subtracted from ending inventory.
• C)presented as an appropriation of retained earnings.
• D)presented in the income statement.

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Definitions:

Opportunity Cost

The price paid by not choosing the second-best option when a decision is made or one choice is selected over another.

Production Possibilities Frontier

A picture that demonstrates all potential maximum outputs for two different goods, grounded on inputs including resources and more.

Descriptive Statement

A statement that describes how the world is, based on observable facts without inferring causation or prescribing actions.

Rent Control

Government policies or regulations that limit the rent landlords can charge tenants, aiming to make housing more affordable.