An Alternative Not Available When the Seller Is Exposed to Continued

question 70

Multiple Choice

An alternative not available when the seller is exposed to continued risks of ownership through right of return of the product is

• A)recording the sale, and accounting for returns as they occur in future periods.
• B)not recording a sale until all return privileges have expired.
• C)recording the sale, but reducing sales by an estimate of future returns.
• D)all of these are alternatives.

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Definitions:

After-tax Cash Inflow

The net amount of cash that remains after all tax obligations have been subtracted from total revenue.

NPV

Net Present Value; a method used in capital budgeting to analyze the profitability of an investment or project.

CCA Rate

Capital Cost Allowance rate; a method of depreciation used for tax purposes in Canada, allowing a business to deduct the cost of certain assets.

Required Rate of Return

The minimum percentage return an investor expects to achieve by investing in a specific asset or project.