Cornwall Co

question 13

Multiple Choice

Cornwall Co.made the following errors in counting its year-end physical inventories: The entry to correct the accounts at the end of 2014 is

• A) Retained Earnings ...................48,000 Cost of Goods Sold ..................42,000 Inventory ........................90,000
• B) Retained Earnings ...................18,000 Cost of Goods Sold ..................72,000 Inventory ........................90,000
• C) Inventory ..........................90,000 Cost of Goods Sold ...............18,000 Retained Earnings ...............72,000
• D) Cost of Goods Sold ..................198,000 Retained Earnings ................108,000 Inventory ........................90,000

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Definitions:

Supply Curve

Represents the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply to the market.

Willingness To Pay

The maximum amount a consumer is prepared to spend to acquire a good or service, reflecting its perceived value.

Full Cost

The total expense associated with producing a product or providing a service, including both direct and indirect costs.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay.