Which of the Following Statements Is Correct

question 25

Multiple Choice

Which of the following statements is correct?

• A) The sales journal is used for recording both cash sales and credit sales.
• B) Since the sales journal is used for a single purpose, there is no need to enter any descriptions.
• C) To provide an adequate audit trail, sales on credit should be recorded in both the sales journal and the general journal.
• D) The complete information for each sale of merchandise on credit can be recorded on one line of the cash receipts journal.

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Definitions:

Machine-Hours

A measure of production time, tracking how many hours machines are operating in the manufacturing process.

Predetermined Overhead Rate

This rate is calculated before the period begins and is used to apply manufacturing overhead costs to products based on a consistent formula.

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production, including factory rent, salaries of permanent staff, and equipment depreciation.

Machine-Hours

A measure of the amount of time machines are operated in the manufacturing process, used as a basis for allocating costs.