A Company Purchased $20,000 of Inventory During February and Will

question 117

Multiple Choice

A company purchased $20,000 of inventory during February and will pay for it during March.Which of the following statements is false,assuming the inventory was sold during March?

• A)The company's accounts payable will include the $20,000 on the February month-end balance sheet.
• B)The statement of cash flows will report an operating cash outflow of $20,000 during March.
• C)The income statement will report cost of goods sold of $20,000 during February.
• D)The company's inventory will include the $20,000 on the February month-end balance sheet.

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Definitions:

Physical Units

A method of measuring production or inventory in terms of actual physical items or volumes, rather than monetary value or time.

Inventory Records

Documentation and tracking of a company's stock of goods or materials, essential for managing inventory levels and financial reporting.

Base Period

A specific time period used as a comparison point for assessing economic or financial data across different periods of time.

Variable Costing

An accounting method that only includes variable costs, such as materials and labor, in the cost of goods sold and excludes fixed overhead costs.