If the Buyer Relies on the Seller's Skill or Judgment

question 90

Multiple Choice

If the buyer relies on the seller's skill or judgment to select the goods for that purpose, an implied warranty ____ is created.

• A) no implied warranty is created in this situation
• B) that the goods are not suited for that purpose
• C) that the goods will be reasonably priced
• D) that the goods will last for at least a year
• E) none of the other choices are correct

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Definitions:

Absorption Costing

A method of accounting that encompasses the total manufacturing expenses – encompassing direct materials, direct labor, as well as both variable and fixed overhead costs – within the product's cost.

Variable Costing

An accounting method that only considers variable costs in product pricing and decision making.

Fixed Overhead Expensed

The practice of charging fixed overhead costs to the income statement in the period they are incurred, rather than allocating them to products.

Inventories

Properties or goods meant for selling in regular business activities, under production for sale, or as resources and supplies for consumption during the production phase or while delivering services.