The Amount of Income That Would Result from an Alternative

question 177

Multiple Choice

The amount of income that would result from an alternative use of cash is called

• A) differential income
• B) sunk cost
• C) differential revenue
• D) opportunity cost

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Definitions:

Sales Allowance

A reduction in the sale price granted by the seller to the buyer, often due to minor defects or because the buyer has returned part of the order.

Sales Returns

Transactions where customers return previously purchased merchandise for a refund, replacement, or credit toward future purchases.

Credit Sales

Sales made on credit, where the payment is received after the delivery of the goods or services.

Contra-Revenue

An account that offsets revenue accounts on the income statement, typically related to returns, allowances, and discounts.