Financial Statements of ABC Corp

question 19

Multiple Choice

Financial Statements of ABC Corp. indicates that ending inventory levels in 2005 and 2006 were $200,000 and $350,000 respectively. Cost of goods sold for 2005 and 2006 were $1,900,000 and $2,200,000 respectively. Purchases in 2006 were:

• A)$1,950,000
• B)$2,150,000
• C)$2,350,000
• D)$1,850,000

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Definitions:

Put Options

Financial contracts giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a specified time frame.

Exercise Price

The price set for buying or selling an asset under the terms of an options contract.

Treasury Bills

Short-term government securities with maturities ranging from a few days to 52 weeks, sold at a discount from their face value.