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