If a company sells goods that cost $70,000 for $82,000, the firm will:
A)reduce Finished-Goods Inventory by $70,000.
B)reduce Finished-Goods Inventory by $82,000.
C)report sales revenue on the balance sheet of $82,000.
D)reduce Cost of Goods Sold by $70,000.
E)reduce Finished-Goods Inventory by $82,000 and report sales revenue of $70,000.

Question

Quizplus · Accepted Answer

When goods are sold, the cost of those goods ($70,000) is removed from Finished-Goods Inventory and recorded as Cost of Goods Sold. Sales revenue of $82,000 is reported on the income statement, not the balance sheet.

If a Company Sells Goods That Cost $70,000 for $82,000