Which of the Following Transactions Is Represented by the Diagram

question 60

Multiple Choice

Which of the following transactions is represented by the diagram below?

• A)a lumber yard where customers may pay with cash for all purchases
• B)a buy-here-pay-here auto dealer where a car buyer sends monthly cash payments to the dealer
• C)a consulting firm that offers a variety of consulting services to other businesses
• D)a department store that allows customers to carry a balance and to make installment payments,if they choose

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Definitions:

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories (assets, liabilities, and equity) is represented as a proportion of the total account.

Profitability Analysis

The process of evaluating the ability of a business to generate earnings as compared to its expenses and other relevant costs incurred during a specific period.

Cost Of Goods Sold

The cost of goods sold is the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from total sales revenue.