Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

The Financial Statements

Financial Accounting

1. Introduction to Accounting

The Financial Statements

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Finished goods inventory is reported on the:

Statement of Retained Earnings

Income Statement as an expense

Statement of Cash Flows under investing activities

Balance Sheet as a current asset

Previous problemNext problem

Verified step by step guidance

Understand the nature of finished goods inventory: Finished goods inventory represents the cost of products that are completed and ready for sale but have not yet been sold. It is considered an asset because it holds economic value for the company.

Identify the financial statement where assets are reported: The Balance Sheet is the financial statement that reports a company's assets, liabilities, and equity at a specific point in time.

Classify finished goods inventory as a current asset: Since finished goods inventory is expected to be sold within the normal operating cycle of the business (usually within a year), it is classified as a current asset on the Balance Sheet.

Eliminate incorrect options: The Statement of Retained Earnings tracks changes in retained earnings, not inventory. The Income Statement reports expenses, but finished goods inventory is not an expense until sold (then it becomes part of Cost of Goods Sold). The Statement of Cash Flows under investing activities deals with long-term investments, not inventory.

Conclude that finished goods inventory is reported on the Balance Sheet as a current asset, as it meets the criteria for current assets and is not relevant to the other financial statements listed.