ACC 201 chapter 6 smartbook

How is cost of goods sold classified in the financial statements?

Expense in the income statement

The definition of inventory includes which of the following items?

Items held for resale Materials used currently in the production of goods to be sold Items currently in production for future sale

gross profit =

Net Sales revenue - COGS

inventory not yet sold is...

asset in the balance sheet

Where is inventory classified in the financial statements?

current asset in the balance sheet

A multiple-step income statement reports multiple levels of

income

Companies are free to choose FIFO, LIFO, or weighted-average cost to report inventory and cost of goods sold. The reported amounts for ending inventory and cost of goods sold will not be the same across inventory reporting methods because:

inventory costs generally change over time.

Companies that produce the inventory they sell are referred to as

manufacturers

The specific identification method...

matches each unit of inventory with its actual cost would be beneficial to a company that makes fine jewelry

The type of income statement that reports a series of subtotals such as gross profit, operating income, and income before taxes is a ______ income statement.

multi-step

On a multiple step income statement, the category of revenues and expenses reported immediately after operating income is referred to as ________ revenues and expenses.

non-operating