Which of the Following Statements Is True

question 42

Multiple Choice

Which of the following statements is true?

• A) Only service companies report both cost of goods sold and gross profit.
• B) Cost of goods sold is the largest expense item for many firms.
• C) Cost of goods sold is not affected by the choice of inventory valuation method.
• D) Cost of goods sold equals gross profit.

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Definitions:

Compound Financial Instrument

A financial instrument that has characteristics that are a combination of a financial asset, financial liability or equity instrument.

Convertible Notes

Debt instruments that can be converted into a specified number of shares of the issuing company at certain times during its life, usually at the discretion of the note holder.

Liability

A present obligation of the entity to transfer an economic resource as a result of past events.

Equity

The value of an owner's interest in a property or business, after subtracting liabilities.