10.1 (Cost of Goods Sold on Income Statement) The Merchandising Business

Which one is the correct formula for Cost of Goods Sold?

• Cost of beginning inventory+Cost of goods purchased+Cost of goods sold=Cost of ending inventory

• Revenue-Expenses=Net Income/Loss

• Cost of beginning inventory - Cost of goods purchased + Cost of ending inventory = Cost of goods sold

• Cost of beginning inventory + Cost of goods purchased - Cost of ending inventory = Cost of goods sold

If the selling price is less then cost of goods sold, then it's a positive Gross profit/Gross margin.

• True

• False

A company purchased merchandise to be resold at increasing costs during the year 20--. The purchased were made on the picture above...

What are the number of units and the cost of goods available for sale?

• 50 units, $46 cost of goods available for sale.

• 150 units, $46 cost of goods available for sale.

• 50 units, $13 cost of goods available for sale.

• 150 units, $1770 cost of goods available for sale.

Which of the following costs will be included in the cost of goods sold line item?

• $10 for the mold used to make your pottery items.

• $1,500 in wages to your marketing manager.

• $4,980 to the healthcare provider.

• $700 in warehouse rent.

What's the best explanation of cost of goods sold?

• The costs related to running a business

• Overhead

• Costs of selling inventory

• All costs directly related to the production of goods produced or cost of inventory sold

On which of the following financial statements is cost of goods sold reported?

• Balance sheet

• Income statement

• Cash flow statement

• Statement of shareholder equity

What is the Gross profit formula?

• Gross profit = Selling price - Cost of goods sold

• Gross profit = Cost of goods purchased - Cost of goods sold

• Gross profit = Cost of beginning inventory + Cost of goods purchased - cost of selling inventory

• Gross profit = Cost of beginning inventory + Cost of goods purchased - cost of goods sold

What's the best explanation for LIFO (Last in, first out) method for cost of goods sold?

• It selects the last item you purchased first, and then works backward until you have the total cost for the total number of units sold during the period.

• It sometimes used by computers when extracting data from an array or data buffer.

• It keeps track of inventory cost.

• I don't know.

If your company acquires 4 units of a product during a period, 1 unit at a time, with unit costs as follows (in the order in which your company acquires the items):

$100, $102, $104, and $106.

If your company sells 3 units during the period, the LIFO method calculates the cost of goods sold expense is:

• $106+$104+$100 = $310

• $100+$102+$104 = $306

• $106+$104+$102 = $312

• $104+$102+$100 = $306

If a Company began the month with $100 inventory, purchased $700 inventory during the month, and ended the month with $60 inventory, how can we calculate the total cost of goods sold for them?

• $100+$700-$60=$740

• $860-$100-$700=$60

• $100+$700+$60=$860

• $700+$60-$100=$540