James Company Experienced the Following Events During Its Accounting Period

question 94

Multiple Choice

James Company experienced the following events during its accounting period: (1) Purchased $10,000 of inventory on account.(2) Returned $2,000 of inventory purchased in Event 1.(3) Paid the remaining balance in account payable for the inventory purchased in Event 1.(4) Sold inventory purchased in Event 1 for $10,000 to customers on account. At the end of the first accounting period what would be reported on the Income Statement for net income?

• A)$2,000
• B)$8,000
• C)$10,000
• D)Zero

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Definitions:

Monopolistic Competition

A market structure characterized by many firms offering products that are similar but not identical, allowing for slight differentiation among them.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and economic agents have fully adjusted to any economic changes.

Perfect Competition

A market structure characterized by a large number of buyers and sellers, freely entering or exiting the market, selling identical products.

Average Total Cost

The total cost of production divided by the quantity produced, encompassing both fixed and variable costs.