The Arrangements Between Buyer and Seller as to When Payments

question 184

Multiple Choice

The arrangements between buyer and seller as to when payments for merchandise are to be made are called

• A) credit terms
• B) net cash
• C) cash on demand
• D) gross cash

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Definitions:

Period Costs

Costs that are not directly tied to the production of goods and are expensed in the accounting period they are incurred, such as sales and administrative expenses.

Prime Cost

The combined costs of raw materials and direct labor involved in the production of a product.

Manufacturing Overhead

Refers to all the indirect costs associated with the production process, such as utilities, maintenance, and salaries of supervisors that are not directly tied to the creation of a product.

Administrative Costs

Expenses related to the general operation of a business, including salaries of executive staff, office supplies, and utilities.