Which of the Following Is an Advantage of the Sales

question 25

Multiple Choice

Which of the following is an advantage of the sales value at split-off method?

• A)Easy to calculate.
• B)Market prices for some industries change constantly.
• C)The sales price might not be available.
• D)Conceptually superior to the revenue recognition method.

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Definitions:

EOQ Model

The Economic Order Quantity model is used to determine the optimal order size to minimize the total inventory costs.

Accounts Receivable

Amounts outstanding from customers to a company for goods or services provided but still unpaid.

Sales on Credit

Sales on Credit refer to transactions where the buyer is allowed to pay for goods or services at a later date, making the sale based on trust that payment will be made in the future.

Lockbox Plan

A cash management tool in which incoming cheques for a firm are sent to post office boxes rather than to corporate headquarters. A local bank will collect the contents of the lockbox and deposit the cheques into the company’s local account.