A Corporation, Which Began Business on January 1, 2006, Appropriately

question 17

Multiple Choice

A corporation, which began business on January 1, 2006, appropriately uses the instalment sales method of reporting for accounting purposes. The following data were available for the years 2006 and 2007: $\begin{array}{|l|l|l|}\hline & \mathbf{2 0 0 6} & \mathbf{2 0 0 7} \\\hline \text { Instalment sales } & \$ 1,050 & \$ 1,260 \\\hline \text { Cost of instalment sales } & 840 & 945 \\\hline \text { General and administrative expenses } & 105 & 126 \\\hline \text { Cash collected on } 2006 \text { instalment sales } &450 & 375 \\\hline \text { Cash collected on } 2007 \text { instalment sales } & & 600 \\\hline\end{array}$ The balance in the deferred gross profit control account on December 2007 should be:

• A) $159
• B) $210
• C) $315
• D) $525

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Definitions:

Employee

A person legally contracted to work for another in return for financial or other compensation, under certain conditions of employment.

Employer-Employee Relationship

A legal and professional relationship between an employer and their employee, characterized by the exchange of labor for compensation, under agreed conditions.

Agents

Individuals or entities authorized to act on behalf of others (principals) in contractual matters or negotiations, creating legal relationships.

Agency by Estoppel

A principle in law whereby a person is prevented (estopped) from denying the existence of an agency relationship due to their previous actions or representations.