True/False
1. Inventory is usually reported as a long-term asset in the balance sheet.
2. Cost of goods sold is an asset reported in the balance sheet and inventory is an expense reported in the income statement.
3. Merchandising companies purchase inventories that are primarily in finished form for resale to customers.
4. Cost of goods sold is an expense reported in the income statement and represents the cost of inventory sold during the period.
5. If a company has beginning inventory of $15,000, purchases during the year of $75,000, and ending inventory of $20,000, cost of goods sold equals $70,000.
6. A multiple-step income statement reports multiple levels of profitability, such as gross profit, operating income, income before income taxes, and net income.
7. Gross profit equals net sales of inventory less cost of goods sold.
8. Sales revenue minus cost of goods sold is referred to as operating income.
9. Income before income taxes equals operating income plus nonoperating revenues less nonoperating expenses.
10. If a company has ending inventory of $25,000, purchases during the year of $95,000, and beginning inventory of $30,000, cost of goods sold equals $90,000.