The Khoo Music Society, a Not-For-Profit Organization, Is Purchasing Musical

question 5

Multiple Choice

The Khoo Music Society, a not-for-profit organization, is purchasing musical instruments to donate to some local schools. Khoo ordered the instruments on August 1, 20X1, and requested the following delivery schedule: $\begin{array}{|l|c|c|}\hline\text { September } 15,20 \mathrm{X} 1 & \text { woodwinds } & (\$ 3,000) \\\hline \text { October } 15,20 \mathrm{X} 1 & \text { strings } & (\$ 5,000) \\\hline \text { October } 31,20\mathrm{X} 1 & \text { brass } & (\$ 6,000) \\\hline \text { November } 15,20\mathrm{X} 1 & \text { drums } & (\$ 6,000) \\\hline\end{array}$ Khoo uses an encumbrance system and has properly recorded the necessary journal entry at August 1, 20X1. At November 15, 20X1, which of the following accounts should be debited and which statement will be affected?

• A)Estimated commitments/statement of operations
• B)Encumbrances-instruments/statement of operations
• C)Estimated commitments/statement of financial position
• D)Encumbrances-instruments/statement of financial position

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Definitions:

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the per unit cost of production.

Natural Monopolist

A single supplier in a market where the costs of production are lowest when just one firm provides the product or service.

Reduce Costs

Measures and practices aimed at decreasing expenses and improving efficiency in processes or operations.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, not based on the costs of production but on what the seller believes each customer can afford or is willing to pay.