Multiple Choice
42. Inventory does not include:
a. Materials used in the production of goods to be sold.
b. Assets intended to be sold in the normal course of business.
c. Equipment used in the manufacturing of assets for sale.
d. Assets currently in production for normal sales.
43. The largest expense on a retailer's income statement is typically:
a. Salaries.
b. Cost of goods sold.
c. Income tax expense.
d. Depreciation expense.
44. 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 ____________.
a. Cost of goods sold; inventory.
b. Goods on hand; inventory expense.
c. Inventory; cost of goods sold.
d. Sales revenue; cost of goods sold.
45. Cost of Goods Sold is:
a. An asset account.
b. A revenue account.
c. An expense account.
d. A permanent equity account.
46. Cost of goods sold equals:
a. Beginning inventory − net purchases + ending inventory.
b. Beginning inventory + accounts payable − net purchases.
c. Net purchases + ending inventory − beginning inventory.
d. Beginning inventory + net purchases − ending inventory.
47. Baker Fine Foods has beginning inventory for the year of $12,000. During the year, Baker purchases inventory for $150,000 and ends the year with $20,000 of inventory. Baker will report cost of goods sold equal to:
a. $150,000.
b. $158,000.
c. $142,000.
d. $170,000.
48. Tyler Toys has beginning inventory for the year of $18,000. During the year, Tyler purchases inventory for $230,000 and has cost of goods sold equal to $233,000. Tyler’s ending inventory equals:
a. $15,000.
b. $18,000.
c. $21,000.
d. $19,000.
49. The distinction between operating and nonoperating income relates to:
a. Continuity of income.
b. Principal activities of the reporting entity.
c. Consistency of income stream.
d. Reliability of measurements.
50. Given the information below, what is the gross profit?
Sales revenue
|
$320,000
|
Accounts receivable
|
50,000
|
Ending inventory
|
100,000
|
Cost of goods sold
|
250,000
|
Sales Returns
|
20,000
|
a. $250,000.
b. $70,000.
c. $220,000.
d. $50,000.
51. Consider the following year-end information for Spitzer Corporation:
Cost of goods sold
|
$420,000
|
Sales revenue
|
800,000
|
Nonoperating expenses
|
10,000
|
Operating expenses
|
170,000
|
Income tax expense
|
80,000
|
What amount will Spitzer report for operating income?
a. $200,000.
b. $210,000.
c. $380,000.
d. $120,000.