When Goods Are Transferred from the Work-In-Process Inventory Account to the Finished

question 132

Multiple Choice

When goods are transferred from the Work-in-Process Inventory account to the Finished Goods Inventory account:

• A)total assets and total liabilities increase by the same amount.
• B)total assets of the company remain constant.
• C)total equity and total assets increase with the same amount.
• D)total liabilities increases and total equity decreases by the same amount.

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Definitions:

Average Operating Assets

A financial metric calculated by averaging the beginning and ending values of assets employed in generating operating income over a certain period.

Minimum Required Rate

The lowest rate of return considered acceptable by investors for investing in a financial instrument, based on risk and alternative opportunities.

Average Operating Assets

An average value of the assets used in the regular operations of a business over a specific period.

Net Operating Income

A measure of a company's profitability, calculated as the difference between its total revenue and operating expenses, excluding taxes and interest.