Which measure reflects profitability from normal operations and a key performance measure for predicting the future profit-generating

Which measure reflects profitability from normal operations and a key performance measure for predicting the future profit-generating ability of a company?

A) Gross profit.

B) Operating income.

C) Income before income taxes.

D) Net income.

Answer: Operating income.

A company is most likely to utilize the specific identification method if its inventory consists of:

A) Unique products.

B) Very expensive products.

C) A relatively small number of products.

D) All of the other answers are reasons to utilize the specific identification method

Answer: All of the other answers are reasons to utilize the specific identification method

Operating income is calculated as net sales minus:

A) Utilities expense.

B) Salaries expense.

C) Cost of goods sold.

D) All of the other answers are subtracted from net sales to calculate operating income.

Answer: All of the other answers are subtracted from net sales to calculate operating income

A company has net sales of $200,000, cost of goods sold of $120,000, selling expenses of $6,000, and nonoperating expenses of $2,000

A company has net sales of $200,000, cost of goods sold of $120,000, selling expenses of $6,000, and nonoperating expenses of $2,000. What is the company's gross profit?

A) $76,000.

B) $80,000.

C) $74,000.

D) $72,000.

Answer: $80,000.

What amount will the company report for operating income?

A) $200,000.

B) $210,000.

C) $380,000.

D) $120,000.

Answer: $210,000.

Gross profit is calculated as net sales minus:

A) Nonoperating expenses and income tax expense.

B) Operating expenses.

C) Cost of goods sold.

D) All of the other answers are subtracted from net sales to calculate gross profit.

Answer: Cost of goods sold.

Given the information in the table below, what is the company's gross profit?

Sales revenue $ 350,000

Accounts receivable $ 280,000

Ending inventory $ 230,000

Cost of goods sold $ 180,000

Sales returns $ 50,000

Sales discounts $ 20,000

A) $280,000.

B) $170,000.

C) $50,000.

D) $100,000.

Answer: $100,000.

Which of the following items may be classified as nonoperating revenues and expenses?

A) Interest expense.

B) Loss on the sale of equipment.

C) Interest revenue.

D) All of the other answers are classified as nonoperating revenues and expenses.

Answer: All of the other answers are classified as nonoperating revenues and expenses.

The type of income statement that reports a series of subtotals such as gross profit, operating income, and income before taxes is a ________ income statement.

A) Single-step.

B) Subtotaled.

C) Multiple-step.

D) Classified.

Answer: Multiple-step.

Tyler Toys has beginning inventory for the year of $18,000. During the year, Tyler purchases inventory for $230,000

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.

Answer: $15,000.

The primary distinction between operating activities and nonoperating activities in a multiple-step income statement is whether the activity is:

A) A large or small dollar amount.

B) Part of primary business operations.

C) Related to current versus long-term assets.

D) Reported as a revenue or an expense.

Answer: Part of primary business operations.

The distinction between operating and nonoperating income relates to:

A) Current versus noncurrent.

B) Primary versus peripheral activities of the reporting entity.

C) Revenues versus expenses.

D) Reliability of measurements.

Answer: Primary versus peripheral activities of the reporting entity.

A company has beginning inventory for the year of $12,000. During the year, the company purchases inventory for $150,000

A company has beginning inventory for the year of $12,000. During the year, the company purchases inventory for $150,000 and ends the year with $20,000 of inventory. The company will report cost of goods sold equal to:

A) $150,000.

B) $158,000.

C) $142,000.

D) $170,000.

Answer: $142,000.

Beginning inventory is $30,000. Purchases of inventory during the year are $50,000. Cost of goods sold is $60,000. What is ending inventory?

A) $20,000.

B) $30,000.

C) $10,000.

D) $50,000.

Answer: $20,000.

The type of income statement that classifies items as operating and nonoperating is the ________ income statement.

A) Consolidated.

B) Multiple-step.

C) Classified.

D) Single-step.

Answer: Multiple-step.

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

Answer: Cost of goods sold; inventory

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.

Answer: Cost of goods sold.

The balance of the Cost of Goods Sold account at the end of the year represents:

A) The cost of inventory not sold in the current year.

B) The total sales revenue to customers.

C) The cost of inventory sold in the current year.

D) Total purchases of inventory for the year.

Answer: The cost of inventory sold in the current year.

For a manufacturing company, the combination of the cost of raw materials, direct labor, and overhead for inventory

For a manufacturing company, the combination of the cost of raw materials, direct labor, and overhead for inventory that has not yet completed production is known as:

A) Work-in-process.

B) Finished goods.

C) Merchandise.

D) Retail goods.

Answer: Work-in-process.

A manufacturer's inventory consists of what type of inventory?

A) Raw materials.

B) Finished goods.

C) Work-in-process.

D) All of the other answers are included in a manufacturer's inventory.

Answer: All of the other answers are included in a manufacturer's inventory.

Cost of Goods Sold is:

A) An asset account.

B) A revenue account.

C) An expense account.

D) A permanent equity account.

Answer: An expense account.