Multiple Choice
Which financial statement is characterized by the formula: revenues \(-\,\) cost of goods sold \(-\,\) expenses \(=\,\) net income?
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4. Merchandising Operations
Single-step Income Statement
Multiple Choice
A company started the year with \$10,000 in inventory, purchased \$25,000 of additional inventory during the year, and ended the year with \$8,000 in inventory. Using a single-step income statement, what is the company's cost of goods sold (COGS) for the year?
A
\$33,000
B
\$23,000
C
\$35,000
D
\$27,000
Verified step by step guidance1
Step 1: Understand the formula for calculating Cost of Goods Sold (COGS). The formula is: \( \text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory} \).
Step 2: Identify the values provided in the problem. Beginning Inventory is \$10,000, Purchases are \$25,000, and Ending Inventory is \$8,000.
Step 3: Substitute the values into the formula. \( \text{COGS} = 10,000 + 25,000 - 8,000 \).
Step 4: Perform the addition and subtraction operations in the formula. First, add Beginning Inventory and Purchases, then subtract Ending Inventory.
Step 5: The result from the calculation will give you the company's Cost of Goods Sold (COGS) for the year.
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