In the Preparation of Departmental Income Statements, the Preparer Completes

question 82

Multiple Choice

In the preparation of departmental income statements, the preparer completes the following steps in the following order:

• A) Identify direct expenses; allocate indirect expenses; allocate service department expenses.
• B) Identify indirect expenses; allocate direct expenses; allocate service department expenses.
• C) Identify service department expenses; allocate direct expenses; allocate indirect expenses.
• D) Identify direct expenses, allocate service department expenses, allocate indirect expenses.
• E) Allocate all expenses.

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Definitions:

Net Sales

This is the amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and any discounts allowed.

Gross Profit

The difference between revenue and the cost of goods sold before accounting for certain other costs.

Net Sales

The revenue from sales after deducting returned goods, allowances for damaged or missing goods, and any discounts allowed.

Cost Of Goods Sold

The expenditures directly associated with manufacturing goods that a company sells, consisting of materials and labor.