What Is the Required Adjustment to ABC's Accounts Receivable at Year-End

question 35

Multiple Choice

What is the required adjustment to ABC's accounts receivable at year-end as a result of this transaction?

• A) CDN$450 decrease.
• B) CDN$900 increase.
• C) CDN$450 increase.
• D)Nil.

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Definitions:

Markup on Cost

The percentage added to the cost of goods to cover overhead and profit, calculated by dividing the gross profit by the cost.

Net Sales

The amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and discounts.

Gross Profit

The financial metric representing the difference between revenue and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

Inventory Value

The total cost or market value of all the goods and products held by a company intended for sale.