Brownlee Ltd Is a Newly Established Retail Store Selling Plumbing

question 11

Multiple Choice

Brownlee Ltd is a newly established retail store selling plumbing hardware. Shown below are ledger accounts in T-account form, with entries made for the first three months of business. What do transactions (6A) and (6B) represent?

• A) Sale of goods on credit and later collection of cash
• B) Sale of goods on credit and for cash
• C) Receipt of cash and purchase of inventory
• D) Sale of goods for cash

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Definitions:

Intermediate Goods

Goods or services used in the production process of final goods and services but are not themselves final products.

Final Goods

These are products and services that have been completed and are ready for consumption or use by the end consumer, not to be further processed or resold.

Inventory Goods

Items that a business holds for the ultimate goal of resale or trade, making up an essential part of a company's current assets.

Mexico's GDP

The total market value of all final goods and services produced within the borders of Mexico in a specific time period.