Why Is the Receipt of an Order from a Customer

question 17

Multiple Choice

Why is the receipt of an order from a customer not regarded as a transaction?

• A) Because an exchange between the entity and the customer has not yet occurred.
• B) Because the computer cannot record it.
• C) Because the customer might cancel the order.
• D) The receipt of an order is regarded as a transaction.

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Definitions:

FOB Shipping Point

A term used in shipping contracts to indicate that the buyer assumes responsibility for the goods and the shipping costs from the point of departure.

Ending Inventory

Refers to the value of goods available for sale at the end of an accounting period.

Inventory Turnover Ratio

A financial metric indicating the number of times a company sells and replaces its stock of goods during a certain period, used to assess the efficiency of inventory management.

FIFO

short for "First In, First Out," is an inventory valuation method where goods purchased or produced first are sold or used first.