A Computer Manufacturer Recently Shipped Several Laptops to a Customer

question 16

Multiple Choice

A computer manufacturer recently shipped several laptops to a customer (cost: $25,000) and billed the customer $30,000. Which of the following options correctly expresses the accounts that are debited and credited to record this transaction?

• A) Debits: Accounts Receivable, Finished-Goods Inventory; credits: Sales Revenue, Cost of Goods Sold.
• B) Debits: Accounts Receivable, Cost of Goods Sold; credits: Sales Revenue, Finished-Goods Inventory.
• C) Debits: Sales Revenue, Cost of Goods Sold; credits: Accounts Receivable, Finished-Goods Inventory.
• D) Debits: Sales Revenue, Finished-Goods Inventory; credits: Accounts Receivable, Cost of Goods Sold.
• E) Debits: Accounts Receivable; credits: Finished-Goods Inventory, Profit on Sale.

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Definitions:

Audit Committee

A subcommittee of a company's board of directors responsible for overseeing the financial reporting process, audits, and compliance with laws and regulations.

Financial Records

Documents that detail the income, expenses, assets, liabilities, and other financial activities of an individual or organization.

Corporate Duties

Responsibilities and obligations that members of a corporation, typically directors and officers, are required to follow in the interest of the corporation.

Business Judgment Rule

A legal principle that protects the decisions of corporate officers and directors when they act in good faith and with a reasonable basis in belief of acting in the best interest of the corporation.