The accountant for the Lintz Sales Company is preparing the income statement for 2014 and the balance sheet at December 31, 2014. The January 1, 2014 merchandise inventory balance will appear
A) only as an asset on the balance sheet.
B) only in the cost of goods sold section of the income statement.
C) as a deduction in the cost of goods sold section of the income statement and as a current asset on the balance sheet.
D) as an addition in the cost of goods sold section of the income statement and as a current asset on the balance sheet.

Question

Quizplus · Accepted Answer

The January 1, 2014 merchandise inventory balance is used to calculate the cost of goods sold (COGS) for the year, which appears on the income statement. It does not appear as a current asset on the balance sheet for the end of the year (December 31, 2014), as the balance sheet will show the ending inventory for 2014, not the beginning inventory.

The Accountant for the Lintz Sales Company Is Preparing the Income