Which of the Following Does Not Correctly Describe the Effect

question 32

Multiple Choice

Which of the following does not correctly describe the effect of recording a credit sale of inventory for a profit?

• A)Sales are recorded when title and risks of ownership are transferred to the buyer.
• B)Current assets increase.
• C)Gross profit increases.
• D)Operating expenses increase.

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Definitions:

Ending Direct Materials Units

The quantity of direct materials still on hand at the end of a production period.

Cash Budget

A financial plan that projects cash inflows and outflows over a specific period, helping businesses manage their liquidity.

Cash Deficiency

A situation where a business or individual has insufficient cash to cover expenses or liabilities.

Planning Process

A systematic approach to setting goals and objectives, developing strategies, and outlining tasks and schedules to accomplish the goals.