Explain Why, When a Customer Returns Merchandise After It Was

question 10

Essay

Explain why, when a customer returns merchandise after it was paid for, he/she may or may not receive credit equal to the invoice value of the merchandise returned.

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Definitions:

Fair Value

The estimated market price of an asset or liability, reflecting the amount for which it could be exchanged or settled between knowledgeable parties in an arm's length transaction.

Book Value

This is the net value of a company's assets minus its liabilities, as recorded on the balance sheet.

FIFO Inventory Method

An inventory valuation method where the first items acquired are the first ones sold, used to determine the cost of goods sold and ending inventory.

Net Income

Net income is the total earnings of a company after subtracting all expenses, including taxes, costs, and losses, from its total revenue, indicating its profit.