8 for external reporting purposes gaap requires companies to treat period costs as a 4306917

8 for external reporting purposes gaap requires companies to treat period costs as a 4306917

8) For external reporting purposes, GAAP requires companies to treat period costs as assets.

9) The primary activity of manufacturing businesses is to purchase goods from a wholesaler and resell them.

10) Service companies include companies that provide health care, communication, banking, and other important benefits to society.

11) The income statement of a service company will most likely include:

A) salary expense.

B) factory overhead.

C) cost of goods sold.

D) direct materials.

12) Which of the following is true of service companies?

A) All of service companies' costs are product costs.

B) Service companies modify and resell products they buy from manufacturers.

C) Revenues of service companies are only recorded on cash receipt.

D) Service companies carry no inventories of products for sale.

13) For a manufacturing company, which of the following is a period cost?

A) Direct materials

B) Office rent

C) Wages expense of factory workers

D) Indirect materials

14) One of the primary activities of Rex Inc. is to purchase hats from Viva Inc. in Texas and sell them to its customers in Washington for a profit. It is likely that Rex is a:

A) manufacturing company.

B) hybrid company.

C) service company.

D) merchandising company.

15) Which of the following is most likely a service company?

A) a law firm

B) a car manufacturer

C) a fruit seller

D) a baker

16) A company that uses labor, equipment, supplies, and facilities to convert raw materials into finished products is a:

A) merchandising company.

B) manufacturing company.

C) service company.

D) trading company.

17) Goods that have been started in the manufacturing process but are not yet complete are included in:

A) the Finished Goods Inventory account.

B) the Work-in-Process Inventory account.

C) the Raw Materials Inventory account.

D

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