The Wang Company Started the Year with 300 Units in Inventory

question 97

Multiple Choice

The Wang Company started the year with 300 units in inventory, which cost $2 each. During January, it bought 700 units, which cost $3 each. During January, it sold 800 units. The amount the Wang Company should show as the value of the 200 items left in its ending inventory, using the FIFO method, is

• A) 400
• B) 500
• C) 540
• D) 600

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Definitions:

Commercial Substance

A consideration in accounting that a transaction has significantly changed the economic circumstances of the participants.

Gain or Loss

The difference between the sale price of an asset and its original purchase price, indicating the financial outcome of a transaction.

Service Potential

This refers to the capacity or ability of a service or asset to provide benefits or usefulness to an entity or its operations.

Land

An economic resource representing natural resources or ground, classified as a fixed asset in accounting, not subject to depreciation.