In Determining the Quantity of Goods to Be Produced or Taken

question 30

Multiple Choice

In determining the quantity of goods to be produced or taken pursuant to an output or needs contract,the rule of ________ applies.

• A)good faith
• B)demand
• C)supply
• D)performance

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Definitions:

Indirect Method

An accounting technique used to prepare the cash flow statement, adjusting net income for changes in non-cash working capital and non-operational gains and losses.

Direct Method

A method of allocating service department costs directly to production departments without considering inter-service department flows.

Accounts Receivable

Funds that clients or customers owe to a company for products or services provided but for which payment has not yet been received.

Accounts Payable

Money owed by a company to its suppliers or vendors for goods and services received, representing a liability on the balance sheet.