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Inventory is typically reported as a(n):

• revenue on the income statement
• expense on the income statement
• asset on the balance sheet
• liability on the balance sheet

The cost of inventory sold during a period is reported on the income statement.

True or False

Companies that purchase inventories in finished form from suppliers are known as manufacturing companies.

True or False

Products that have been started in the production process but are not yet the end of the period are known as:

• raw materials inventory
• work-in-process inventory
• finished goods inventory

Wholesalers resell inventory to end users.

True or False

Walmart is an example of a:

• manufacturer
• retailer
• wholesaler

Which of the following steps in the flow of inventory costs for a manufacturing company occurs first?

• Converting raw materials into finished products
• Purchasing raw materials
• Selling finished products to merchandising companies

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?

• $200,000
• $80,000
• $170,000
• $120,000

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?

• $30,000
• $40,000
• $20,000
• $10,000

The costs of beginning inventory plus additional purchases during the year make up the cost of inventory available for sale.

True or 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

Which of the following is an example of a nonoperating expense for a merchandising company?

• Depreciation expense
• Interest expense
• Supplies expense
• Advertising 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?

• $50
• $60
• $65
• $45

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

The FIFO method assumes that:

• each unit of inventory can be matched with its actual cost.
• the cost of goods sold consists of a random mixture of all goods available for sale.
• the first units purchased are the first ones sold.
• the last units purchased are the first ones sold.

The inventory transactions of Green Products |nc.are shown below. Number of Unit Date Transaction Units Cost Jan. 1 Beginning inventory 500 $5 May 15 Purchase 1 , 000 6 Jun. 10 Purchase 500 7 Oct. 25 Purchase 2,000 8 Units sold during the year: 3,000 What is the amount of cost of goods sold that Green Products will report in its income statement for the current year, if it uses the first-in, first-out cost method? Knowledge Check 01 The inventory transactions of Green Products Inc.are shown below. Number of Unit Date Transaction Units Cost Jan. 1 Beginning inventory 500 $5 May 15 Purchase 1 , 000 6 Jun. 10 Purchase 500 7 Oct. 25 Purchase 2,000 8 Units sold during the year: 3,000 What is the amount of ending inventory that Green Products will report in its balance sheet at the end of the year, if it uses the first-in, first-out cost method? Knowledge Check 01 The inventory transactions of Green Products |nc.are shown below. Number of Unit Date Transaction Units Cost Jan . 1 Beginning inventory 500 $5 May 15 Purchase 1 , 000 6 Jun. 10 Purchase 500 7 Oct. 25 Purchase 2,000 8 Units sold during the year: 3,000 What is the amount of cost of goods sold that Green Products will report in its income statement for the current year, if it uses the last-in, first-out cost method? Knowledge Check 01 The inventory transactions of Green Products Inc.are shown below. Number of Unit Date Transaction Units Cost Jan. 1 Beginning inventory 500 $5 May 15 Purchase 1 , 000 6 Jun. 10 Purchase 500 7 Oct. 25 Purchase 2,000 8 Units sold during the year: 3,000 What is the amount of ending inventory that Green Products will report in its balance sheet at the end of the year, if it uses the last-in, first-out cost method