Accounting 225- Chapter 6
methods that are available for costing inventory
-specific identification -weighted average -lifo -fifo
finished goods
items for which the manufacturing process is complete
Raw materials
cost of components that will become part of the finished product but have not yet been used in production
work in process
cost of products that have been started in production but not yet completed
Wholesale and retail companies
purchase goods that are primarily in completed form
manufacturing companies
purchase goods that are used to produce another product
Which of the following accounts are typically reported in the balance sheet of a manufacturing company?
-finished goods -work in process -raw materials
Which of the following are manufacturing companies?
-apple in. -coca cola
One of the major differences between service companies and retail or manufacturing companies is that retailers and manufacturers must account for:
-cost of goods sold -inventory
Some companies refer to "cost of goods sold" as:
-cost of products sold -cost of merchandise sold -cost of sales
The work-in-process inventory account typically includes which cost?
-direct labor -indirect manufacturing costs -direct material
The definition of inventory includes which of the following items?
-items currently in production for future sales -items used currently in the production of the goods to be sold -items held for resale
the 3 costs related to the manufacturing process
-raw materials -direct labor -overhead
A company is most likely to utilize the specific identification method of its inventory for:
-very expensive products -unique products
Inventory is classified as:
a current asset
The average cost method assumes that cost of goods sold consists of:
a mixture of all the goods available for sale
When inventory is sold, the cost of inventory is recognized as an:
expense
Which of the following sells inventory to end users?
retailers
Specific identification
the inventory costing method that matches each unit of inventory with its actual cost
Companies that serve as intermediaries between manufacturers and end users are typically referred to as ____ companies.
merchandising
Gross Profit:
net sales revenue minus cost of goods sold