Which Statement Best Depicts the Inventory Cost Flow Equation

question 13

Multiple Choice

Which statement best depicts the inventory cost flow equation?

• A)Cost of goods available for sale = Beginning inventory + Ending inventory.
• B)Beginning inventory + Purchases = Cost of sales + Ending inventory.
• C)Sales - Cost of goods sold = Gross margin.
• D)Gross margin - Operating expenses = Operating income.

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Definitions:

Cocoa

A powder made from roasted and ground cacao seeds, used in the making of chocolate, as well as in baking and cooking.

Leather Jackets

Clothing items made from the hides of animals, typically cows or sheep, treated for durability and aesthetics.

Whips

Flexible, often long and slender pieces of material typically made of leather or a similar substance, used either for driving animals or as a means of punishment.

Utility Function

A representation of an individual’s preference ordering over a set of outcomes, quantifying the satisfaction or happiness derived.