Use the Following Financial Information to Find the Entry You

question 69

Multiple Choice

Use the following financial information to find the entry you would make on an income statement for NET INCOME (LOSS) for the year ended December 31, 2011: Gross Sales, $223,000; Sales Returns and Allowances, $11,200; Sales Discounts, $1,800; Merchandise Inventory, January 1, 2011, $67,600; Merchandise Inventory, December 31, 2011, $78,300; Net Purchases, $84,000; Freight In, $950; Salaries, $107,200; Rent, $19,500; Utilities, $1,450; Insurance, $2,150; and Income Tax, $14,900.

• A) $135,750
• B) $210,000
• C) $9,450
• D) ($9,450)

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Definitions:

Output

The amount of goods or services produced by a company, industry, or country within a specific period.

Cost

The monetary value spent to produce or obtain goods and services, including manufacturing, material, labor, and overhead costs.

Units

Basic quantities or measures adopted to quantify and measure goods, services, or any other items.

Production Function

A mathematical representation that explains how inputs in production are related to the goods or services produced.