If Assets of Martin's Pet Store Are $107,000 and Owners

question 74

Multiple Choice

If assets of Martin's Pet Store are $107,000 and owners' equity is $75,000, which of the following statements is correct?

• A) The current assets are worth $32,000.
• B) The new income for the period is $32,000.
• C) The long-term liabilities are $75,000.
• D) The liabilities are $32,000.

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Definitions:

Inventory Ledger

A detailed record that tracks the quantities and costs of all types of inventory a company has in stock during a specific period.

Weighted-Average Method

Valuing of inventory where each item is assigned the same unit cost. This unit cost is found by dividing the cost of goods available for sale by the total number of units for sale.

Perpetual Inventory System

An inventory management method where stock levels are updated continuously as sales and purchases occur.

Perpetual

A method of inventory accounting where inventory levels and cost of goods sold are updated in real-time with each sale or purchase transaction.