Assume That the Total Inventory on Hand at the End

question 1

Multiple Choice

Assume that the total inventory on hand at the end of the year as determined by taking a physical inventory is $63,000. Excluded from the count were purchases of $6,000 in transit under FOB shipping point terms. What is the cost of inventory reported on the balance sheet?

• A) $69,000
• B) $63,000
• C) $57,000
• D) $55,000

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Definitions:

Foreign Subsidiary

A company that is based in a different country from the parent company but is owned or controlled by the parent company.

Functional Currency

The main form of money used in the leading economic setting where a business functions.

Current Liabilities

Financial obligations or debts of a business that are due to be settled within one year from the balance sheet date.

Net Monetary Assets

The difference between monetary assets and monetary liabilities, used to assess liquidity position.