General-Purpose Equipment

question 19

Multiple Choice

General-purpose equipment:

• A)is designed for maximum flexibility
• B)is used extensively in intermittent manufacturing
• C) is designed and used to produce one or a few specific parts
• D) a and b only are true
• E)none of the above are true

Calculate and interpret inventory turnover ratios.

Understand the principles and effects of writing down inventory to net realizable value.

Understand correcting entries for previously understated or overstated inventories.

Grasp how inventory transactions affect financial statements under different inventory systems (perpetual vs. periodic).

---

Definitions:

Cost of Goods Sold

An accounting term representing the direct expenses related to producing or purchasing the goods sold by a company during a given period.

Amortization

The process of gradually paying off debt over a period of time through scheduled, pre-determined payments.

Gross Margin

The gross margin refers to the difference between the revenue generated from sales and the cost of goods sold, usually expressed as a percentage of revenue.

Operating Statement

A financial document that provides a summary of a company's revenues, expenses, and profit or loss over a specific period.