In Applying LCM, Market Cannot Be

question 35

Multiple Choice

In applying LCM, market cannot be:

• A) Less than net realizable value.
• B) Greater than the normal profit.
• C) Less than the normal profit margin.
• D) Greater than net realizable value.

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Definitions:

List Price

The initial sales price of a product or service before any discounts or allowances are applied.

Cash Discount

A reduction in the invoice amount offered by a seller to a buyer as an incentive for early payment, typically within specific terms.

Sales Returns and Allowances

Reductions in sales revenue for returned goods or for allowances given to customers for defective or unsatisfactory merchandise.

Gross Profit

The difference between the revenue a company earns from selling goods or services and the cost of goods sold.