In the General Ledger the Accounts Used to Determine the Cost

question 52

Multiple Choice

In the general ledger the accounts used to determine the cost of goods manufactured are closed to the manufacturing summary account which is then closed to the:

• A) income summary account.
• B) cost of sales account.
• C) gross profit account.
• D) profit account.

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Definitions:

Cost Basis

The original value or purchase price of an asset or investment, used to calculate capital gains or losses for tax purposes.

Accumulated Depreciation

The total depreciation costs applied to a fixed asset from the time of its acquisition.

Fair Market Value

The price at which a willing buyer and a willing seller, both possessing reasonable knowledge of relevant facts, would exchange an asset.

Journal Entry

A record in the books of accounts that represents a business transaction, involving at least two accounts to record the financial activity.