During the Year, Carla's Pet Shop's Merchandise Inventory Decreased by $40,000

question 236

Multiple Choice

During the year, Carla's Pet Shop's merchandise inventory decreased by $40,000. If the company's cost of goods sold for the year was $600,000, purchases must have been

• A) $640,000.
• B) $560,000.
• C) $520,000.
• D) Unable to determine.

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Definitions:

Income Ratios

Metrics that evaluate a company's ability to generate earnings relative to its revenue, equity, assets, or other financial metrics.

Liquidation

The process of closing a business and distributing its assets to claimants.

Noncash Assets

Assets that cannot be easily converted to cash, such as property, equipment, and investments, often used for operational purposes.

Income Ratios

Financial metrics that compare different aspects of a company's income to other figures, typically used to assess financial performance and efficiency.