In Recording the Sale of Accounts Receivable the Commission Charged

question 223

Multiple Choice

In recording the sale of accounts receivable the commission charged by a factor is recorded as

• A) Bad Debt Expense.
• B) Commission Expense.
• C) Loss on Sale of Receivables.
• D) Service Charge Expense.

---

Definitions:

Overstated Inventory

A situation where the book value of inventory is recorded higher than its actual physical count or market value, potentially misleading financial statements.

Owner's Equity

The residual interest in the assets of a business after all liabilities are deducted, often considered the net worth of a business.

Inventory Turnover

A financial ratio indicating how many times a company's inventory is sold and replaced over a specified period, measuring efficiency in managing stock levels.

Merchandise Sold

The total goods that have been sold by a company, typically measured over a specific period like a fiscal quarter or year.