What Type of Business Would Calculate Cost of Sales in the Income

question 26

Multiple Choice

What type of business would calculate cost of sales in the income statement as stock of finished goods at start + purchases - stock of finished goods at end?

• A) A service business
• B) A manufacturer
• C) A retailer
• D) A non-profit organisation

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Definitions:

Book Value Method

An accounting technique that determines the value of an asset as per the company’s balance sheet, subtracting liabilities from assets.

Market Value

The price at which an asset would trade in a competitive auction setting.

Par Value

A nominal or face value assigned to a share of stock in the company's charter, representing the minimum amount the stock can be sold for.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the ownership interest of shareholders.