Identify the Condition(s)that Must Exist for a Sale and the Related

question 147

Multiple Choice

Identify the condition(s) that must exist for a sale and the related receivable to be recognized.

• A)Collection of cash is probable.
• B)The company must have collected cash from at least one previous sale to the customer.
• C)Goods or services have been provided to the customer.
• D)Two of the other answers are conditions that must exist.

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Definitions:

Unit Sales Price

The amount that a business charges for one unit of its product or service.

High-Low Method

A technique used in cost accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.

Variable Cost Element

A cost that varies directly with the level of production or sales volume, such as materials and direct labor.

Fixed Cost Element

The portion of total costs that does not change with the variation in activity level or production volume.