A Company Loses It Opening Financial Records in a Fire

question 64

Multiple Choice

A company loses it opening financial records in a fire.During the following year, it incurred costs of production of $250,000 and sold $300,000 in merchandise.It took an inventory count and found that it had $100,000 in product on hand.What should the company's opening inventory show before the fire?

• A)$50,000
• B)$100,000
• C)$150,000
• D)Cannot be determined from the above information

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Definitions:

Income Statement

A financial report that shows a company's revenues, expenses, and profits over a specific period, indicating its financial performance.

Incurred

Refers to costs or expenses that have been recognized or acquired, usually due to a company's operations or activities.

Interest Expense

The cost incurred by an entity for borrowed funds, representing the price paid for the use of borrowed money or for delaying the repayment of a debt.

Operating Expense

Expenses incurred through normal business operations, like rent, utilities, and payroll.