Android Electronics Received an Order for 50 Digital Radios on 1

question 111

Multiple Choice

Android Electronics received an order for 50 digital radios on 1 June. The customer took delivery of the radios on 15 June. Android Electronics received payment from the customer on 20 June. The customer returned the goods as being unsuitable on 2 August. According to the profit recognition principle, on which date would the income be recorded?

• A)20 June
• B)The income would not be recorded at all.
• C)15 June
• D)1 June

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Definitions:

Marginal Cost

The cost of producing one more unit of a good or service, which may change with the level of output.

Fixed Cost

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance.

Total Cost

The total of all costs associated with producing goods or services, encompassing both constant and fluctuating expenses.

Variable Cost

Variable cost is a cost that varies directly with the level of production or sales volume, such as materials and labor costs.