Which of the Following Is True of Open Accounts

question 24

Multiple Choice

Which of the following is true of open accounts?

• A) Sales on open accounts are very common as a method of payment in foreign trade.
• B) Sales on open accounts are generally recommended when special merchandise is ordered by the buyer.
• C) Sales on open accounts are not generally recommended when there is political unrest in the importer's country.
• D) When the country of the importer imposes difficult exchange restrictions, the best payment arrangement recommended is open accounts.
• E) Sales on open accounts are less risky for the seller when it involves new buyers.

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Definitions:

Measuring Product Costs

Measuring product costs involves calculating the total expenses incurred in the production of goods, including direct materials, direct labor, and manufacturing overhead.

Work In Process Inventory

Items in the production process that are not yet finished products, including material, labor, and overhead costs applied to them.

Actual Manufacturing Overhead Costs

The incurred expenses related to producing goods that are not directly tied to the product such as utilities, rent, and maintenance.

Overapplied Overhead

A situation where the allocated manufacturing overhead costs for a period exceed the actual overhead costs incurred.