A Company Just Starting Business Made the Following Three Inventory

question 90

Multiple Choice

A company just starting business made the following three inventory purchases in February: On Feb 15, there were 300 units sold. The company uses a perpetual inventory system.
-Using the FIFO inventory cost formula, the amount allocated to cost of goods sold for the February 15 sale is

• A) $1,525.
• B) $1875.
• C) $4,950.
• D) $3,075.

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Definitions:

Market Price

The current market price for the acquisition or disposal of a service or asset.

Average Sale Period

The average time it takes for a company to sell its inventory, a critical measure for assessing the efficiency of inventory management.

Balance Sheet

A financial statement that summarizes a company’s assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

A report showcasing a corporation's financial results for a particular accounting cycle, which includes information on income, costs, and earnings.