If the Shipping Terms Are FOB Shipping Point and the Freight

question 87

Multiple Choice

If the shipping terms are FOB shipping point and the freight bill is $200, the purchaser, using a perpetual inventory system would record payment of the freight with a debit to:

• A)Inventory and credit to Cash for $200.
• B)Accounts Payable and credit to Inventory for $200.
• C)Inventory and credit to Purchases Discounts for $200.
• D)Purchases Discounts and credit to Inventory for $200.

Recognize the significance of keeping in mind the assumptions and predictions upon which a budget is based.

Identify the responsibilities of the person managing the budget process.

Calculate inventory purchasing requirements based on sales forecasts and inventory levels.

Understand the different types of budgets within an organization (overhead, cash, etc.).

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Definitions:

Diminishing Returns

A principle stating that as more of a variable input is added to fixed inputs, the additional output gained from each new unit of input eventually decreases.

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, ceteris paribus.

Production Technique

The method or process used to convert inputs into outputs in manufacturing or service delivery.

Price of Labor

The wages or salary paid to workers for their labor, typically determined by the supply and demand for labor in the market.