Accounting Chapter 6
Which of the following steps in the flow of inventory costs for a manufacturing company occurs first?
Purchasing raw materials
Inventory is typically reported as a(n):
asset on the balance sheet
Walmart is an example of a:
retailer
The FIFO method assumes that:
the first units purchased are the first ones sold.
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
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
An appropriate use of the specific identification method is in accounting for low-cost, similar inventory items that are difficult to separately identify. (True or False)
False
Companies that purchase inventories in finished form from suppliers are known as manufacturing companies. (True or False)
False
The multiple-step income statement begins by reporting that a company's sales revenues minus cost of goods sold equals net income. (True or False)
False
Wholesalers resell inventory to end users. (True or False)
False
Which of the following is an example of a nonoperating expense for a merchandising company?
Interest expense
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
The cost of inventory sold during a period is reported on the income statement. (True or False)
True
The costs of beginning inventory plus additional purchases during the year make up the cost of inventory available for sale. (True or False)
True
