Unger Company Uses the Perpetual Inventory Method

question 15

Multiple Choice

Unger Company uses the perpetual inventory method. Unger sold goods that cost $3,500 for $7,200. If the sale was made to a customer on account, the sale will:

• A) increase total assets by $3,700.
• B) increase total liabilities by $7,200.
• C) increase total liabilities by $3,500.
• D) increase total assets by $7,200.

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Definitions:

Amortization

The process of spreading out a loan into a series of fixed payments over time, or the gradual reduction of the book value of an intangible asset over its useful life.

Cash Flows

The total amount of money being transferred into and out of a business, affecting the company's liquidity.

Financing Activities

Transactions related to raising capital and repaying investors, including issuing equity, borrowing, and repaying debt.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the company's assets and earnings.