When a Merchandiser Sells on Account, Which of the Following

question 35

Multiple Choice

When a merchandiser sells on account, which of the following accounts is NOT needed to record the transaction?

• A)Cost of Goods Sold
• B)Accounts Receivable
• C)Inventory
• D)Cash

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Definitions:

Fixed Manufacturing Overhead

The costs that do not vary with the level of production or sales, such as salaries of managers, rent of the factory, and depreciation of manufacturing equipment.

Predetermined Overhead Rate

A pre-determined rate utilized for attributing manufacturing overhead costs to products or job orders, which is established beforehand based on anticipated expenses and levels of activity.

Variable Manufacturing Overhead

consists of production costs that fluctuate with the level of output, such as utilities or materials used in the maintenance of equipment.

Fixed Manufacturing Overhead

Indirect manufacturing costs that do not vary with production volume, such as salaries of managers, rent, and utility expenses.