The Necessary Adjustment to the Sales Amount Shown on the Income

question 9

Multiple Choice

The necessary adjustment to the sales amount shown on the income statement to arrive at cash collections from customers is:

• A)subtract the change in accounts receivable
• B)add all the change in purchases
• C)add the total amount of orders not yet shipped
• D)none of the above

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Definitions:

Mixed Cost

A cost consisting of both fixed and variable components and which is thus partially affected by changes in the level of activity.

Charitable Contribution

Monetary or in-kind donations given to charitable organizations, often eligible for tax deductions.

Sunk Cost

Expenses that were previously incurred and cannot be reclaimed.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, essentially what is sacrificed when a particular choice is made.