The Cost of Downtime Caused by Quality Problems with the Raw

question 235

Multiple Choice

The cost of downtime caused by quality problems with the raw materials would be classified as what type of cost?

• A)Prevention cost
• B)Appraisal cost
• C)External failure cost
• D)Internal failure cost

Understand the concept of estimated liabilities and identify common types.

Calculate employer payroll tax expenses accurately.

Record warranty expenses and understand how they affect financial statements.

Detail the procedures and significance of employee benefits and understand their accounting treatment.

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Definitions:

Non-cash Expenses

Expenses recorded on a company's income statement that do not involve an actual cash outlay, such as depreciation or amortization.

Sales Returns and Allowances

Deductions from gross sales that reflect products returned by customers and discounts provided for minor defects.

Contra-asset Account

A type of account in the general ledger that reduces the value of a related account when its balance is subtracted from the balance of the related account.

Contra-revenue Account

An account that is offset against a revenue account on the income statement, typically relating to sales returns, allowances, and discounts.