In Its First Year of Operations as a Retailer, Hwang

question 492

Multiple Choice

In its first year of operations as a retailer, Hwang Ltd.reported a gross profit of $135,000, total purchases of $160,000, and an ending inventory of $75,000.Therefore, Hwang's sales in its first year must have been

• A)$60,000.
• B)$80,000.
• C)$180,000.
• D)$220,000.

Understand the use of Refund Liability (deferred revenue) accounts for tracking expected sales returns and allowances.

Calculate purchase discounts and comprehend their effect on inventory costs and accounting records.

Recognize the importance of physical inventory counts in both perpetual and periodic inventory systems.

Define and categorize Cost of Goods Sold and operating expenses for merchandising companies.

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Definitions:

Activity-Based Costing

A pricing strategy that allocates overhead and indirect expenses to associated goods and services in proportion to their use of resources.

Total Minutes

This term often refers to the total amount of time calculated for a particular process, activity, or operational measurement.

Time-Driven

A method or system that calculates costs based on the time resources are used.

Activity-Based Costing

A cost distribution method that identifies operations within an entity and allocates the cost of these operations to each product and service according to their actual utilization.