On May 1, Franke Co

question 65

True/False

On May 1, Franke Co. purchases 2,000 shares of Computech for $25,000. This investment is considered to be an available-for-sale securities. On July 31 (Franke's year-end), these shares had a market value of $28,000. Franke should record a credit to Gain on Investment for $3,000.

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Definitions:

Cost

An amount that must be paid or spent to buy or obtain something, often related to the production or purchase of goods and services.

Merchandise

Merchandise refers to goods or products that are purchased, stored, and sold by businesses to generate revenue.

Net Purchases

The total amount of purchases made by a company after subtracting returns, allowances, and discounts.

Merchandise Available

The total goods available for sale during a certain period, including both beginning inventory and purchases made.