The Entries to Record Cost and Sale of a Finished

question 21

Multiple Choice

The entries to record cost and sale of a finished good on account is:

• A) debit Cost of Goods Sold, credit Finished Goods
• B) debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit Sales
• C) debit Sales Expense, credit Finished Goods, credit Cash, credit Accounts Receivable
• D) debit Work in Process, credit Finished Goods, debit Accounts Receivable, credit Sales

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Definitions:

Ordinary Income

Earnings derived from standard business operations and not classified as capital gains or dividend income.

Extraordinary Income

Uncommon and infrequent gains not related to the normal operations of a business.

Effective Interest Amortization

A method for calculating the amortized cost of a bond or loan based on periodic interest expense, reflecting the actual interest rate.

Bonds Outstanding

The total amount of bonds that have been issued by a corporation or government entity that remain unpaid.