Suppose Company a Places an Order with Company B on May

question 29

Multiple Choice

Suppose Company A places an order with Company B on May 12.On May 14,Company B ships the ordered goods to Company A with terms FOB destination.The goods arrive at Company A on May 17.Company A begins selling the goods to customers on May 19 and pays Company B on May 20.When would Company B record the sale of goods to Company A?

• A)May 12.
• B)May 14.
• C)May 19.
• D)May 17.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Income Tax Expense

The amount of income tax a company owes to federal, state, or local authorities, recognized as an expense in the period it is incurred.

Income Tax Payable

The amount of income tax a company owes to the government but has not yet paid.

Cash Paid

The total amount of cash disbursed by a business for various purposes, such as operating expenses, purchases, and investments.