Accounting 230 Exam 3
blog inc. has net sales of $50,000, cost of goods sold of $30,000 and selling expenses of $5,000. its gross profit is ____
20,000
inventory not yet sold is classified as a
asset in the balance sheet
when inventory is sold, the cost of inventory is recognized as an
expense
____ inventory consists of items for which the manufacturing process is complete
finished goods
a multiple-step income statement reports multiple levels of ___
income
inventory is classified as
a current asset
companies that produce the inventory they sell are referred to as
manufacturers
Major differences between service companies and retail or manufacturing companies that retailers must account for
cost of goods sold and inventory
where is inventory classified in the financial statements
current asset in the balance sheet
net sales revenue minus cost of goods sold is
gross profit
what type of company purchases raw materials and makes goods to sell
manufacturers
_____ companies purchase inventory that is primarily in finished form and ready for resale to customers
merchandising
companies that serve as intermediaries between manufacturers and end users typically are referred ___ companies
merchandising
____ inventory includes the cost of components that will become part of the finished product but have not yet been used in production
raw materials
the work in process inventory account typically includes which costs
raw materials, direct labor, indirect manufacturing costs
which of the following costs are recognized in work in process for a manufacturing company?
raw materials, direct labor, overhead
The cost of goods not yet sold is recorded in the ____ account, whereas the cost of goods that are sold to customers is recorded in___
inventory and cost of goods sold
____ inventory refers to the product that have been started in production but are still incomplete
work in process
"cost of sales" is another name for which of the following accounts
cost of goods sold
a major difference between companies that provide services and companies that manufacture or sell goods is that those that manufacture or sell goods must account for
inventory
beg. inventory is $20,000. Purchases of inventory during the year are $100,000. Ending inventory is $50,000. what is cost of goods sold?
$70,000
items held for sale in the normal course of business are referred to as what
inventory
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
multiple step
which of the following accounts are typically reported in the balance sheet of a manufacturing company
raw materials, finished goods, work in process
work in process inventory refers to inventory where the manufacturing process is ___, whereas finished goods refers to inventory where the manufacturing process is ____
unfinished, complete
which of the following accounts would be found in the balance sheet of a manufacturing company
work in process
Prather inc. has sales of $100,000, sales returns of $5,000, cost of goods sold of $60,000 and selling expenses of $3,000. calculate gross profit
$35,000
beg. inventory is $60,000. purchases of inventory during the year are $100,000. Cost of goods sold is $120,000. What is ending inventory?
$40,000
when goods are sold, the cost of the goods is transferred from the Inventory account to the Cost of Goods Sold account
True
the definition of inventory includes which of the following? a. items held for resale b. items currently in production for future sale c. items used currently in the production of goods to be sold d. all of the above
d
How is the cost of goods sold classified in the financial statements?
expense in the income statement