Paral Company Began Operations on January 2, 2011, and Appropriately

question 40

Multiple Choice

Paral Company began operations on January 2, 2011, and appropriately used the installment sales method of accounting. The following data are available for 2011 and 2012:

The realized gross profit for 2012 is

• A) $1,440,000.
• B) $1,040,000.
• C) $920,000.
• D) $780,000.

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Definitions:

Beginning Inventory

The value of inventory held by a business at the start of an accounting period.

Inventory Costing Method

Techniques used to assign costs to inventory and cost of goods sold, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Gross Profit

The financial metric calculated by subtracting the cost of goods sold from net sales, representing the profit from selling goods before deducting operating expenses.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated using a specific inventory valuation method.