Sales Returns from a Customer

question 47

Multiple Choice

Sales returns from a customer:

• A) increase Cost of Goods Sold.
• B) increase Revenue.
• C) decrease Cost of Goods Sold.
• D) have no effect on Cost of Goods Sold.
• E) increase operating expenses.

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Definitions:

Economic Profit

The gap between all earnings and total expenditures, factoring in both overt and hidden costs.

Accounting Profit

The total revenue of a business minus the explicit costs associated with that business, as calculated for financial accounting and reporting purposes.

Explicit Costs

Direct, out-of-pocket payments made by businesses for resources and services.

ATC

Average Total Cost, which is the total cost of production divided by the number of goods produced, representing the per unit cost of production.