Question

2. Goods available for sale are allocated to both ending inventory and cost of goods sold. (3 points)

A) True B) False

3. Patents, trademarks, and franchises are examples of tangible assets. (3 points) A) True
B) False

4. An expenditure is capitalized when it is reported as an expense on the income statement. (3 points)

A) True B) False

6. General Motors purchased on account a shipment of iron bars from Furnace Inc. and promptly paid within the discount period. Compute the total value of inventory purchased. (4 points)

Invoice price:
Shipping cost (FOB destination point): Purchase allowance for flawed pieces: Cash discount offered:

A) 189,000 B) 190,000 C) 209,000 D) 210,000 E) 249,000

220,000 20,000 20,000 5%

Answer 1

2) Goods available for sale are allocated to both ending inventory and cost of goods sold. (3 points)

A) True

Cost of goods available for sale minus ending inventory equals cost of goods sold.

3) Patents, trademarks, and franchises are examples of tangible assets.

B) False

Patents, trademarks, and franchises are examples of intangible assets

4)

An expenditure is capitalized when it is reported as an expense on the income statement. (3 points)

B) False

6) Answer : C)209,000

(220,000 + 20,000 - 20,000) x (1 - 5%) = 209,000