Which of the Following Transactions Does Not Affect Gross Profit

question 129

Multiple Choice

Which of the following transactions does not affect gross profit?

• A)A customer returning merchandise that was sold for a profit.
• B)The collection of cash on an account receivable,which was paid for by the customer within the discount period.
• C)The journal entry to record bad debt expense.
• D)Accepting a credit card for a sale and paying a service fee to the credit card company.

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Definitions:

Prepaid Rent

A type of asset account on the balance sheet that represents rent payments made in advance of the rental period.

Adjusting Entry

A journal entry made in accounting to update the records for accruals and deferrals that have not yet been recorded.

Accrued Revenue

Income that has been earned but not yet received, typically recorded in the accounting period it is earned rather than when cash is exchanged.

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel adjusting entries made at the end of the previous period, simplifying the recording of subsequent transactions.