On December 31, 2013, the Merchandise Inventories Account of the Japanese

question 35

Multiple Choice

On December 31, 2013, the Merchandise Inventories account of the Japanese electronics firm Flower Limited (Flower) had a balance of ¥408,700 million, based on Flower's financial reports for fiscal 2013.Assume that during 2014, Flower purchased merchandise inventories on account for ¥1,456,400 million.On December 31, 2014, it finds that merchandise inventory on hand is ¥412,400 million.Select the correct journal entries to account for all changes in the Inventories during 2014.(Flower applies Japanese accounting standards, and reports its results in millions of yen (¥) .In answering this question, assume that Flower uses either U.S.GAAP or IFRS; for purposes of this problem, this choice will not matter.)

• A)Cost of Goods Sold ¥1,452,700 million
• Merchandise Inventories ¥1,452,700 million
• B)Merchandise Inventories ¥1,452,700 million
• Cost of Goods Sold ¥1,452,700 million
• C)Cost of Goods Sold ¥1,449,000 million
• Merchandise Inventories ¥1,449,000 million
• D)Merchandise Inventories ¥1,449,000 million
• Cost of Goods Sold ¥1,449,000 million
• E)none of the above

---

Definitions:

Output

The total amount of goods and services produced by an economy, business, or machine over a specific period.

Per-Worker Production Function

A graphical representation showing the relationship between the amount of output produced per worker in a firm and various amounts of capital per worker.

Bowed Shape

A term describing the concave shape of the Production Possibilities Frontier (PPF), highlighting increasing opportunity costs as production shifts from one good to another.

Diminishing Returns to Scale

A situation where, after a certain point, additional inputs result in less proportional increases in output.