Which of the Following Statements Regarding Trade Receivables Is True

question 9

Multiple Choice

Which of the following statements regarding trade receivables is true?

• A) Trade receivables owe money to the business.
• B) Cash sales give rise to trade receivables.
• C) Trade receivables are suppliers of the business who have supplied goods on credit.
• D) Trade receivables are a non-current asset of a business.

---

Definitions:

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated prior to the start of the accounting period based on estimated costs and activity levels.

Job-Order Costing

An accounting method used to assign costs to specific batches or orders of goods, often used in manufacturing for custom products.

Total Job Cost

The cumulative costs of materials, labor, and overhead assigned to a specific job or project.

Machine-Hours

A measure of the amount of time machines are operating during the production process, often used for allocating costs.