A company sells goods for $150,000 that cost $60,000 to manufacture. Which statement(s) are true?
A) The company will recognize sales on the balance sheet of $150,000.
B) The company will recognize $90,000 gross profit on the balance sheet.
C) The company will decrease finished goods by $60,000.
D) All of these are true.

Question

Quizplus · Accepted Answer

The company will decrease finished goods by $60,000 because the cost of goods sold is $60,000, which reduces the inventory. Sales and gross profit are recognized on the income statement, not the balance sheet.

A Company Sells Goods for $150,000 That Cost $60,000 to Manufacture