accounting 6.1

COGS equals

Beg. inventory + net purchases - end inventory

Gross profit is calculated as net sales minus

Cost of goods sold.

Which of the following is an example of a nonoperating expense for a merchandising company?

interest expense

The weighted-average method assumes that:

the cost of goods sold consists of a random mixture of all goods available for sale

The FIFO method assumes that:

the first units purchased are the first ones sold.

inventory

the items a company intends for sale to customers (asset)

The LIFO method assumes that:

the last units purchased are the first ones sold.

Inventory is typically reported as a(n): ___ on the _____

asset on the balance sheet

The cost of unsold inventory at the end of the year is classified as an ______ in the ________

asset; balance sheet

Walmart is an example of a:

retailer

Ending inventory represents the actual units not sold during the year=

specific identification

Travis Corporation begins the year with $50,000 of tire inventory. The company purchases tires worth $150,000 during the year. At the end of the year, the purchase cost of remaining inventory is $30,000. What is the cost of goods sold?

$170,000

Dane Stores begins the year with $30,000 of DVD inventory. It purchases DVDs worth $80,000 during the year. The cost of goods sold for the year is $70,000. What is the amount of ending inventory?

$40,000

Trivia Company reports a gross profit of $100, income tax expense of $15, selling, general, and administrative expenses of $35, nonoperating revenues of $10, and nonoperating expenses of $15. What is the company's operating income?

$65 (100-35)

Equation for weighted-avg method?

(Add all number of units x unit cost together (so the $ value once calculated) / total number of units)

The cost of the goods that a company sold during a period is shown in its financial statements as ___________ and the cost of the goods that a company still has on hand at the end of the year is shown in the financial statements as ____________.

COGS; Inventory

Assume inventory sold for the year includes the items that were purchased first = (first units in are first sold)

FIFO

Determine which method will result in higher profitability when inventory costs are rising?

FIFO

T/F: An appropriate use of the specific identification method is in accounting for low-cost, similar inventory items that are difficult to separately identify.

False

T/F: Companies that purchase inventories in finished form from suppliers are known as manufacturing companies.

False

T/F: The multiple-step income statement begins by reporting that a company's sales revenues minus cost of goods sold equals net income.

False

T/F: Wholesalers resell inventory to end users.

False

One of the major differences between service companies and retail or manufacturing companies is that retailers and manufacturers must account for:

Inventory

Assume the ending inventory for the year indicates the items that were purchased first= (last units in are first sold)

LIFO

Which of the following steps in the flow of inventory costs for a manufacturing company occurs first?

Purchasing raw materials

T/F: The cost of inventory sold during a period is reported on the income statement.

True

T/F: The costs of beginning inventory plus additional purchases during the year make up the cost of inventory available for sale.

True

COGS is ___ account:

an expense account

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

merchandising company

purchases inventories that are primarily in finished form for resale to customers

Products that have been started in the production process but are not yet complete at the end of the period are known as:

work-in-process inventory