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