Fox Auto Sold Merchandise to a Customer for $3,000 on Credit

question 150

Multiple Choice

Fox Auto sold merchandise to a customer for $3,000 on credit on March 10.The customer paid Fox Auto the amount due on March 31.Under the accrual basis of accounting, which of the following statements is true?

• A)Fox Auto will recognize the revenue on March 31.
• B)The March 10th transaction increases revenue, but has no effect on assets because cash has not been received.
• C)Revenue is recognized after the cost of the merchandise sold has been paid by Fox Auto.
• D)The March 31st transaction has no effect on total assets under the accrual basis.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

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Drawing a conclusion about a certain characteristic of a population based on a sample from it.

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The provision of reasons or evidence to justify a claim or argument.