Question : 41. When customers return goods for cash refunds or, if the : 1230556

41. When customers return goods for cash refunds or, if the customer has not yet paid, for cancellation of the customer’s obligation to pay, the firm records a sales  
A. allowance
B. return
C. discount
D. credit
E. debit

42. Sales discounts and allowances include: 
A. allowances for unsatisfactory merchandise
B. discounts for prompt payment
C. allowances for satisfactory merchandise
D. interest charges for late payment
E. choices a and b

43. The _____ convention, links the timing of some expenses with revenue recognition.  
A. going concern
B. conservatism
C. matching
D. materiality
E. objectivity

44. The firm recognizes an expense when the following condition(s) hold(s). 
A. The consumption of the asset results from a transaction that leads to the recognition of revenue.
B. The consumption of the asset results from the passage of time.
C. The expenditures on advertising must be recognized as expense in the period of expenditure.
D. The expenditures on research must be recognized as expense in the period of expenditure.
E. all of the above

45. Which of the following is not a period expense? 
A. administrative expenditures
B. expenditures on advertising
C. expenditures on research
D. cost of goods sold
E. all of the above are period expenses

46. A seller of goods can easily associate (or match) the consumption of the benefits of the asset sold with revenues from its sale. At the time of sale and revenue recognition, the seller  
A. removes the asset (inventory) from the seller’s balance sheet
B. recognizes revenue
C. recognizes a reduction in an asset (inventory).
D. records the cost of goods sold expense in the same amount by which inventory decreases
E. all of the above

47. Which of the following is false regarding a merchandising firm?  
A. purchases inventory for resale
B. does not change the physical form of the inventory
C. performs no incremental work on the inventory
D. adds nothing to the acquisition cost of the inventory after it is purchased
E. none of the above are false regarding a merchandising firm

48. Which of the following is/are not true regarding a merchandising firm? 
A. inventory appears on the merchandiser’s balance sheet initially as an asset
B. inventory is measured at acquisition cost
C. when a sale takes place, the firm recognizes the cost of the inventory as an expense (cost of goods sold) on the income statement
D. when a sale takes place, the firm recognizes the inventory reduction on the statement of cash flows.
E. all of the above are false regarding a merchandising firm

49. Which of the following is not true regarding a manufacturing firm? 
A. incurs costs as it produces goods by changing the physical form of raw materials
B. product costs are the costs incurred in manufacturing goods for sale
C. costs to produce finished goods inventory do not become expenses until the firm sells the product
D. prior to sale, the production costs represent the transformation of assets from one form into another
E. product costs are treated as period costs during the period that the inventory is finished and ready for sale

50. A manufacturing firm has manufacturing costs which become product costs.  These manufacturing costs do not include: 
A. direct material costs (or raw material costs)
B. direct labor costs
C. manufacturing overhead costs (sometimes called indirect manufacturing costs)
D. expenditures for administrative staff
E. expenditures for supervisors’ salaries, factory utilities, property taxes, insurance, and depreciation on manufacturing plant and equipment