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Multiple Choice

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1. Alabama Company's beginning and ending inventory amounts were $80,000 and $120,000, respectively. Cost of goods sold was $520,000. Alabama Company purchased ________ of inventory.

2. Current assets are converted to costs or sold or consumed within:
a)the longer of one year or one operating cycle
b)the shorter of one year or one operating cycle
c)one fiscal year or one calendar year
d)one calendar year

3. ________ is the major operating activity that decreases cash.
a)Purchases of inventory on account
b)Equipment purchases
c)Payments for inventory purchases
d)Advance payments for rent

4. Debentures are:
a)short-term liabilities arising from income transactions
b)debt secured by a claim against specific assets
c)debt secured by a general claim against total assets
d)unearned revenues.

© BrainMass Inc. brainmass.com September 21, 2018, 8:25 am ad1c9bdddf - https://brainmass.com/business/working-capital-management/inventory-current-assets-change-cash-debentures-205743

Solution Preview

1. We use the equation
Cost of goods sold = Beginning Inventory + Purchases - Ending Inventory
520,000=80,000+Purchases - 120,000
Purchases = ...

Solution Summary

The solution explains some multiple choice questions relating to inventory, current assets, change in cash and debentures.