Answer to Question #244131 in Accounting for nicole

Question

Directions: Answer the following questions with the most correct answer whether the selection is in multiple-choice or supply the answer.

4. If the normal operating cycle is 8 months to August 30, 2023, and the 12 months after the reporting period will jump to the date of December 31, 2023, when is the threshold of

proving that the asset or liability is current? (Pick between August 30, 2023, and

December 31, 2023, only) Explain your position.

5. Which of the following is the correct formula in finding COGS or COS?

a. The COS for manufacturing entities is zero because of its value in deflation.

b. The COS for merchandising entities is goods available for sale minus the ending amount of inventories.

c. The COS for service entities is service available for sale plus the beginning service inventories.

d. The COS for service entities is equal to the adjusted market selling price.

6. Explain why the three items you have not chosen above are incorrect.

Answer 1

4. The threshold of proving that the asset or liability is current is 30th August 2023, since August is part of normal operating cycle and it is within one financial year.

5. b. The COS for merchandising entities is goods available for sale minus the ending amount of inventories.

 6. a. The COS for manufacturing entities is zero because of its value in deflation is wrong because the COS for manufacturing entities can never be equal to zero.

c. The COS for service entities is service available for sale plus the beginning service inventories is wrong because to derive the service available for sale, you add beginning inventory plus net purchases.

d. The COS for service entities is equal to the adjusted market selling price is wrong because COS is not determined by the market and cannot be equal to the market price but the costs of production and inventory are what determines COS.