The Gajet Store Inc

question 24

Multiple Choice

The Gajet Store Inc. started its operations on January 1, 2015. It engages in buying and selling different types of electronic gadgets. The first step in its operating cycle would be to:

• A)collect cash from customers.
• B)sell goods to customers.
• C)purchase inventory from vendors.
• D)record the sales in accounts.

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Definitions:

Unit Variable Cost

The cost associated with producing one additional unit of product, which varies with the level of production.

Units Of Activity

A depreciation method that allocates the cost of an asset based on its usage, activities, or units produced instead of time.

Direct Materials Cost

The cost of materials that are an integral part of the finished product.

Fixed Cost

A cost that remains constant in total regardless of changes in the level of activity, such as lease payments and managerial salaries.