To Calculate the Total Cost of a Merchandise Purchase, the Invoice

question 58

Multiple Choice

To calculate the total cost of a merchandise purchase, the invoice account must beadjusted for which of the following?

• A)Any discounts given to a purchaser by a supplier.
• B)Any freight costs paid by a purchaser.
• C)Any taxes or other costs necessary to make the goods ready for sale.
• D)Any returns and allowances received from a supplier.
• E)All of these answers are correct.

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Definitions:

Target Net Profit

A specific financial goal for net income that a company aims to achieve within a certain period.

Contribution Margin Ratio

The ratio of contribution margin (sales minus variable costs) to sales revenue, showing the proportion of sales revenue that exceeds variable costs.

Price Increase

An adjustment in the cost of goods or services, typically resulting in consumers paying more for those items.

Contribution Margin Ratio

A financial metric that measures how much of a company's revenue is left over after variable costs are subtracted, expressed as a percentage of sales revenue.