Mineral Makers (MM) Company Keeps Its Inventory Records Using a Perpetual

question 214

Multiple Choice

Mineral Makers (MM) Company keeps its inventory records using a perpetual system. At December 31, 2014 the unadjusted balance in the Inventory account is $64,000. Through a physical count on December 31, 2014, MM determines that its actual inventory at year-end is $62,500. Which of the following is true regarding the statement of financial position and the income statement of MM at December 31, 2014?

• A) Inventory is increased and cost of goods sold is decreased by $1,500.
• B) Inventory is decreased and cost of goods sold is increased by $1,500.
• C) Inventory is increased and cost of goods sold is increased by $1,500.
• D) Inventory is decreased and cost of goods sold is decreased by $1,500.

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Definitions:

Labor

The effort by humans to produce goods or services in exchange for wages or other forms of compensation.

Total-Product Schedule

A table showing the output or total product resulting from various quantities of inputs or resources, used in production theory.

Marginal Revenue Product

The increase in revenue resulting from the utilization of one extra unit of a factor of production.

Resource

An economic or productive factor required to accomplish an activity or as means to undertake an enterprise and achieve desired outcome.