General Lighting During the First Quarter of 2012,the Company Sold

question 5

Multiple Choice

General Lighting During the first quarter of 2012,the company sold 4,000 batteries on credit for $150 each plus state sales tax of 6%.
-Refer to General Lighting.The $150 price of each battery includes a $3 federal excise tax.Which of the following statements is true regarding the proper accounting treatment for the taxes related to this transaction?

• A)They are recorded as additions to revenue.
• B)They are recorded as unearned revenues on the company's balance sheet.
• C)They are recorded as a current liability owed to the taxing authority.
• D)They are recorded as expenses in the same period as the corresponding sales revenue.

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Definitions:

Dollar-value LIFO Retail Method

This method combines the Last In, First Out (LIFO) inventory method with dollar-value calculations to adjust inventory for changes in price levels, often used in retail.

Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services over a period of time.

Ending Inventory

The total value of all goods available for sale at the end of an accounting period.

Purchases

The total amount spent on goods and services bought by a business for either resale or use in its operation.