A Pottery Factory Purchases a Continuous Belt Conveyor Kiln for $68,000

question 105

Multiple Choice

A pottery factory purchases a continuous belt conveyor kiln for $68,000. A 6.3% APR loan with monthly payments is taken out to purchase the kiln. If the monthly payments are $765.22, over what term is this loan being paid?

• A) 8 years
• B) 9 years
• C) 10 years
• D) 11 years

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Definitions:

Perpetual Inventory System

An accounting technique that instantly records the sale or purchase of inventory using computerized point-of-sale systems and enterprise asset management software.

FIFO

"First In, First Out," an inventory valuation method where goods first added to inventory are the first ones to be sold.

Ending Inventory

The worth of items ready for sale at the conclusion of an accounting cycle, determined by adding the initial inventory to acquisitions and subtracting the cost of goods sold.

Perpetual Inventory System

A financial recording approach that instantly logs inventory transactions upon sale or purchase using electronic point-of-sale systems and enterprise resource planning software.