Holliday Company's Inventory Records Show the Following Data: a Physical

question 113

Multiple Choice

Holliday Company's inventory records show the following data: A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for ₤3 each. The company has an effective tax rate of 20%. Holliday uses the periodic inventory method. Under the FIFO method, the December 31 inventory is valued at

• A) ₤3,500.
• B) ₤3,625.
• C) ₤3,750.
• D) ₤4,500.

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Definitions:

Liability Accounts

Accounts on a balance sheet representing what a company owes to others, including loans, mortgages, and accounts payable.

Debits

Entries on the left-hand side of an accounting ledger, indicating increases in assets or expenses or decreases in liabilities or equity.

Transactions

Economic activities or events that affect the financial position of a company and can be quantified in monetary terms.

Journal Entries

Written records of all the financial transactions of a business, which are then used to prepare financial statements.