When a Company Sells Merchandise Inventory on Account

question 143

Multiple Choice

When a company sells merchandise inventory on account:

• A) the receipt of cash increases their wealth.
• B) making the sale increases their wealth.
• C) the gain on the transaction occurs when the cash is received.
• D) total assets are increased when the cash is received.

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Definitions:

Large Sums

Large sums typically refer to a significantly high amount of money in various financial contexts, including investments, transactions, or savings.

Mutually Exclusive Projects

In capital budgeting, projects that automatically exclude one another. Projects are mutually exclusive either because they’re different approaches to doing the same thing or because limited resources preclude doing more than one.

Meeting Need

The process or action of satisfying a requirement, demand, or essential condition.

Profitability Index

A calculation used to assess the desirability of an investment, based on its present value of future cash flows relative to its initial cost.