Find the Entry You Would Make on an Income Statement

question 64

Multiple Choice

Find the entry you would make on an income statement for TOTAL OPERATING EXPENSES for the year ended December 31, 2011: Gross Sales, $141,000; Sales Returns and Allowances, $7,600; Sales Discounts, $9,600; Merchandise Inventory, January 1, 2011, $50,300; Merchandise Inventory, December 31, 2011, $42,400; Net Purchases, $62,100; Freight In, $1,000; Salaries, $80,500; Rent, $18,900; Utilities, $1,225; Insurance, $2,250; and Income Tax, $17,400.

• A) $71,000
• B) $102,875
• C) $120,275
• D) $123,800

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Definitions:

Perfectly Competitive

A perfectly competitive market is characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information.

Price Maker

A market participant with the power to influence the price of a good or service by controlling its supply, its demand, or both.

Perfect Competition

A market structure characterized by many buyers and sellers, where all firms sell identical products and no single buyer or seller can influence the market price.

Identical Goods

Products that are exactly the same in every aspect, leading consumers to have no preference for one product over another based on characteristics, brand, or quality.