-Refer to Figure 8-5

question 101

Multiple Choice

-Refer to Figure 8-5. The firm's manager suggests that the firm's goal should be to maximise average profit. If the firm does this, what is the amount of profit that it will earn?

• A) $6600
• B) $6750
• C) $12 150
• D) $36 000

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Definitions:

Perpetual Inventory System

An accounting method that continuously updates inventory records for sales and purchases, providing a highly current account of inventory on hand.

Net Method

An accounting technique where discounts for prompt payment are calculated and recorded immediately, reducing the purchase cost of inventory.

Allowance for Sales Discounts

An account used in bookkeeping to estimate the reduction in revenue due to sales discounts that customers are expected to take advantage of.

Accounts Receivable

Debts owed by customers to a business for items or services that have been furnished but not compensated.