Determine the Amount of the Capital Gain or Loss in Each

question 45

Multiple Choice

Determine the amount of the capital gain or loss in each of the following transactions and state whether the gain or loss is long-term or short-term.

• A)100 shares of Bilco stock bought for $8,000 on January 22 of year 3 and sold for $10,000 on January 22 of year 4.
• B)20 acres of investment land bought for $8,000 on January 31 of year 3 and sold for $7,000 on February 2 of year 4.
• C)150 shares of Data stock bought for $15,000 on April 1 of year 2 and sold for $17,000 on May 28 of year 4.

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Definitions:

Perpetual Inventory System

A system for inventory accounting that immediately records inventory transactions, whether it's a sale or purchase, through computerized point-of-sale systems and software for managing enterprise assets.

Periodic Inventory System

An accounting method where inventory and the cost of goods sold are determined at the end of an accounting period.

Periodic Inventory System

An inventory accounting system that updates inventory balances and cost of goods sold at the end of an accounting period.

Cost Of Goods Sold

A financial measure that calculates the cost incurred to produce products sold by a company, including materials and labor.