CHAPTER 14: CASH AND ACCRUAL BASIS

1. Under accrual basis of accounting, cash receipts and disbursements may

a. Precede, coincide with, or follow the period in which revenue and expenses are recognized.
b. Precede or coincide with but never follow the period in which revenue and expenses are
recognized.
c. Coincide with or follow but never precede the period in which revenue and expenses are
recognized.
d. Only coincide with the period in which revenue and expenses are recognized.

2. Which statement regarding accrual basis versus cash basis of accounting is true?
a. The cash basis is appropriate for smaller entities.
b. The cash basis is less useful in predicting the timing and amount of future cash flows of an
entity.
c. Application of the cash basis results in an income statement reporting revenue and expenses.
d. The cash basis requires a complete set of double entry records.

3. Under cash basis of accounting

a. Revenue is recorded when earned.
b. Accounts receivable would be recorded.
c. Depreciation is not recognized.
d. The matching principle is ignored.

4. Under the cash basis of accounting, revenue is recorded

a. When earned and realized
b. When earned and realizable
c. When earned
d. When realized

5. Total net income over the life of an entity is

a. Higher under the cash basis than under the accrual basis
b. Lower under the cash basis than under the accrual basis
c. The same under the cash basis as under the accrual basis
d. Not susceptible to measurement

6. Under International Financial Reporting Standards

a. The cash basis of accounting is accepted
b. Events are recorded in the period the events occur.
c. Net income is lower under the cash basis than accrual basis.
d. All of the choices are correct.
7. Accrual accounting adheres to which of the following?
a. Matching principle
b. Historical cost principle
c. Matching principle and historical cost principle
d. Neither matching principle nor historical cost

8. Under accrual accounting, which of the following does not describe a deferral?
a. Deferral of revenue occurs when cash is received and recognized in financial income.
b. Deferral typically results in the recognition of a liability or prepaid expense.
c. Cash collected in advance of services being rendered.
d. Cash paid up front for a one-year insurance policy.

9. Under accrual basis, a deferral is a transaction that impacts

a. Cash and the income statement at the same time
b. The income statement before impacting cash
c. Cash before impacting the income statement
d. The statement of financial position before impacting cash

10. Which statement is true about accrual and cash basis?

a. Under accrual, if the earning process is not complete, revenue is nevertheless recorded.
b. Under cash basis, if cash has been collected, revenue is recorded regardless of earning process.
c. Under cash basis, revenue is recognized when the receivable is initially recorded.
d. All of these statements are true.

11. The premium on a three-year insurance policy expiring on December 31, 2022 was paid in total on
January 1, 2020. If the entity has six-month operating cycle, then on December 31, 2020 the prepaid
insurance reported as current asset would be for
a. 6 months
b. 12 months
c. 18 months
d. 24 months

12. The premium on a three-year insurance policy expiring on December 31, 2022 was paid in total on
January 1, 2020. The original payment was initially debited to a prepaid asset account. The
appropriate adjusting entry had been recorded on December 31, 2020. The balance in the prepaid
asset account on December 31, 2020 should be
a. Zero
b. The same as it would have been if the original payment had been debited initially to an
expense account
c. The same as the original payment
d. Higher than if the original payment had been debited initially to an expense account
13. The premium on a three-year insurance policy expiring on December 31, 2022 was paid in total on
January 1, 2020. If the original payment was recorded as prepaid assets, how would total assets and
shareholders’’ equity be affected during 2020?
a. Total assets would decrease and shareholders’ equity
b. Both total assets and shareholders’ equity would decrease
c. Both total assets and shareholders’ equity would increase
d. Neither total assets nor shareholders’ equity would change

14. The premium on a four-year insurance policy expiring on December 31, 2023 was paid in total on
January 1, 2020. If the original payment was recorded as a prepaid asset, the balance in the prepaid
asset account on December 31, 2020 would be
a. Lower than the balance on December 31, 2020
b. Lower than the balance on December 31, 2022
c. The same as balance on December 31, 2022
d. The same as the original payment

15. At the beginning of the current year, an entity signed a 5-year contract enabling it to use a patented
manufacturing process beginning in the current year. A royalty is payable for each product produced,
subject to a minimum annual fee. Any royalties in excess of the minimum will be paid annually. On
the contract date, the entity prepaid a sum equal to two years’ minimum annual fees. In the current
year, only minimum annual fees were incurred. The royalty prepayment shall be reported in the
current year-end financial statement as
a. An expense only
b. A current asset and an expense
c. A current asset and a noncurrent asset
d. A noncurrent asset
 Chapter 16: Error Correction

1. If ending inventory is understated, the effect is to

a. Overstate the net purchases
b. Overstate the gross margin
c. Overstate the cost of goods available for sale
d. Overstate the cost of goods sold

2. If beginning inventory is overstated, the effect is to

a. Overstate net purchases
b. Overstate gross margin
c. Overstate cost of goods available for sale
d. Understate cost of goods sold

3. The overstatement of ending inventory in the current year will cause

a. Retained earnings to be understated in the current year-end statement of financial position.
b. Cost of goods sold to be understated in the income statement of next year.
c. Cost of goods sold to be overstated in the income statement of the current year.
d. Statement of financial position not to be misstated in the next year-end.

4. At the middle of the year, an entity paid for insurance premium for the current year and debited the
amount to prepaid insurance. At year-end, the bookkeeper forgot to record the amount expired. In
the financial statements prepared at year-end, the omission
a. Overstates owners’ equity
b. Understates assets
c. Understates net income
d. Overstates liabilities

5. If at the end of current reporting period, an entity erroneously excluded some goods from ending
inventory and also erroneously did not record the purchase of these goods, these errors would cause
a. The ending inventory to be overstated
b. The retained earnings to be understated
c. No effect on net income, working capital and retained earnings
d. Net income to be understated

6. When the current year’s ending inventory is overstated

a. The current year’s cost of goods sold is overstated.
b. The current year’s total assets are understated.
c. The current year’s net income is overstated.
d. The next year’s income is overstated.
7. An overstatement of ending inventory in the current period would result in income of the next
period being
a. Overstated
b. Understated
c. Correctly stated
d. The answer cannot be determined from the information

8. Which would result if the current year’s ending inventory is understated in the cost of goods sold
calculation?
a. Cost of goods sold would be overstated
b. Total assets would be overstated
c. Net income would be overstated
d. Retained earnings would be overstated

9. If the beginning inventory in the current year was overstated, the income for the current year would
be
a. Understated and assets are correctly stated
b. Understated and assets are overstated
c. Overstated and assets are overstated
d. Understated and assets are understated

10. Which of the following would cause income to be overstated in the period of occurrence?
a. Overestimating bad debt expense
b. Understating beginning inventory
c. Overstated purchases
d. Understated ending inventory

11. Failure to record the expired amount of prepaid rent expense would not
a. Understate expense
b. Overstate net income
c. Overstate owners’ equity
d. Understate liabilities

12. Failure to record accrued salaries at the end of an accounting period results in
a. Overstated retained earnings
b. Overstated assets
c. Overstated revenue
d. Understated retained earnings
13. Failure to record depreciation at the end of an accounting period results in
a. Understated income
b. Understated assets
c. Overstated expense
d. Overstated assets

14. Which of the following is a counterbalancing error?

a. Understated depletion expense
b. Bond premium under-amortized
c. Prepaid expense adjusted incorrectly
d. Overstated depreciation expense

15. Which error will not self-correct next year?

a. Accrued expense not recognized at year-end
b. Accrued revenue not recognized at year-end
c. Depreciation expense overstated for the year
d. Prepaid expense not recognized at year-end
 Chapter 18: Book Value per Share

1. Which of the following shareholder rights most commonly enhances in an issue of preference
shares?
a. The right to vote for the board of directors
b. The right to maintain one’s proportional interest
c. The right to receive a full cash dividend before dividends are paid to other classes of share
capital
d. The right to vote on major corporate issue

2. Preference shares participate ratably with the ordinary shareholders in any profit distribution
beyond the prescribed preference rate
a. Cumulative feature
b. Participating feature
c. Callable feature
d. Redeemable feature

3. Which feature of preference share would most likely be opposed by ordinary shareholders?
a. Convertible
b. Callable
c. Redeemable
d. Participating

4. Noncumulative preference dividends in arrears

a. Are not paid and not disclosed
b. Must be paid before any other cash dividends can be distributed
c. Are disclosed as liability until paid
d. Are paid to preference shareholders if sufficient funds remain after payment of ordinary
dividend

5. How should cumulative preference dividends in arrears be reported?

a. Note disclosure
b. Increase in shareholders’ equity
c. Increase in current liabilities
d. Increase in noncurrent liabilities
 Chapter 19: Basic Earnings per share

1. EPS disclosure are required for

a. Entities whose ordinary shares and potential ordinary shares are publicly traded
b. Entities that are in the process of issuing ordinary shares in the public market
c. All entities
d. Entities whose ordinary shares and potential ordinary shares are publicly traded and entities
that are in the process of issuing ordinary shares in the public market

2. EPS disclosures are

a. Required for all public and nonpublic entities
b. Required for all public entities and encouraged for nonpublic entities
c. Encouraged for public entities and required for nonpublic entities
d. Encouraged for all entities

3. When an entity issues both consolidated and separate financial statements, the EPS information is
required
a. For both sets of financial statements
b. In neither set of financial statements
c. Only for consolidated financial statements
d. Only for separate financial statements

4. Earnings per share shall be computed on the basis of

a. The number of shares outstanding at the end of the year
b. A weighted average of the number of shares outstanding during the year regardless of the
extent of fluctuations
c. A weighted average of the number of shares outstanding during the year except that minor
fluctuations in the number of shares may be disregarded
d. The number of shares outstanding at the middle of the year

5. Earnings per share shall be reported for all of the following except
a. Continuing operations
b. Discontinued operations
c. Net income
d. Gross income

6. In computing basic earnings per share, of the preference shares are cumulative, the amount that
should be deducted as an adjustment to the numerator is the
a. Preference dividends in arrears
b. Preference dividends paid during the year
c. Annual preference dividend
d. Annual ordinary dividend
7. In computing basic earnings per share, the amount of preference dividends on noncumulative
preference shares should be
a. Deducted from net income whether declared or not
b. Deducted from net income only when declared
c. Added to the net income only when declared
d. Ignored

8. In computing basic earnings per share, the full amount of the required preference dividends on
cumulative preference shares for the period should be
a. Ignored
b. Deducted from net income only when declared
c. Deducted from net income whether declared or not
d. Added to net income whether declared or not

9. In computing basic loss per share, the annual preference dividend on cumulative preference shares
should be
a. Ignored
b. Deducted from the net loss whether declared or not
c. Added to the net loss whether declared or not
d. Added to the net loss only when declared

10. In the computation of weighted average number of shares when there is a share split, the additional
shares are
a. Weighted by the number of days outstanding
b. Weighted by the number of months outstanding
c. Considered outstanding at the beginning of the year
d. Considered outstanding at the beginning of the earliest year reported

11. Earnings per share information is calculated before accounting for which of the following?
a. Preference dividend for the period
b. Ordinary dividend
c. Taxation
d. Minority interest

12. Which figure for earnings does EPS information use?

a. Net income attributable to ordinary equity holders and preference shareholders of the parent
b. Net income before taxation
c. Net income from operations
d. Net income attributable to ordinary equity holders of the parent
13. When an entity issues a share split
a. The previous year’s EPS is not adjusted for the issue
b. The previous year’s EPS is adjusted for the issue
c. Only a note of the effect on the previous year’s EPS is made
d. Only the diluted EPS for the previous year is adjusted

14. If a bonus issue occurs between the year-end and the date that the financial statements are
authorized
a. The EPS both for the current and the previous year are adjusted
b. The EPS for the current year only is adjusted
c. No adjustment is made to EPS
d. Diluted EPS only is adjusted

15. If a new issue of shares for cash is made between the year-end and the date that the financial
statements are authorized
a. The EPS both for the current and the previous year are adjusted
b. The EPS for the current year only is adjusted
c. No adjustment is made to EPS
d. Diluted EPS only is adjusted

16. The weighted average number of shares outstanding during the period for all periods should be
adjusted for
a. Any change in the number of ordinary shares without a change in resources
b. Any prior period adjustment
c. Ant new issue of shares for cash
d. Any convertible instruments settled in cash

17. Ordinary shares issued as part of a business combination are included in the EPS calculation from
a. The beginning of the accounting period
b. The date of acquisition
c. The end of the accounting period
d. The midpoint of the accounting year

18. Shares issued to settle a liability are included in the EPS calculated from
a. Date of the contract for services
b. Halfway through the rendering of services
c. The completion of service
d. The settlement date
19. Shares to be issued upon the conversion of a mandatorily convertible instrument are included in the
calculation of basic earnings per share from
a. The date of the contract for the share’s
b. Halfway through the period
c. The date of conversion
d. The issue of the share certificate

20. Under IFRS, where ordinary shares are issued but not fully paid, the ordinary shares are treated in
EPS
a. In the same way as fully paid ordinary shares
b. As a fraction of an ordinary share to the extent that the subscribed shares are entitled to
participate in dividends
c. In the same way as warrants or options
d. Are ignored
 Chapter 20: Diluted Earnings per Share

1. The calculation of diluted EPS assumes that share options were exercised and that the proceeded
were used to
a. Buy ordinary shares as an investment
b. Retire preference shares
c. Buy treasury shares
d. Increase net income

2. Options and warrants are dilutive if

a. The exercise price is lower than the average market price
b. The exercise price is higher than the average market price
c. The exercise price is equal to the average market price
d. The option shares represent 20% of ordinary shares

3. When applying the treasury share method for diluted EPS, the market price of the ordinary share
used for the assumed acquisition of treasury shares is the
a. Market price at the end of the year
b. Average market price during the year
c. Market price at the beginning of the year
d. Average market price over a two-year period

4. In applying the treasury share method of computing diluted earnings per share, when is it
appropriate to use the average market price of ordinary share during the year as the assumed
repurchase price?
a. Always
b. When the average market price is higher than the exercise price
c. Never
d. When the average market price is lower than the exercise price

5. Under the treasury share method, the number of potential ordinary shares is equal to
a. Option shares
b. Option share minus assumed treasury shares
c. Assumed treasury shares
d. Option share actually issued during the year

6. All of the following must be disclosed in relation to earnings per share, except
a. Forecast earnings per share for the following year
b. Instruments that could potentially dilute basic earnings per share in the future but not included
in the diluted EPS because they are antidilutive in the current period
c. The weighted average number of ordinary shares used
d. The earnings figure used in calculating EPS
7. Dilution of EPS is defined as
a. Decrease in earnings per share when any financial instrument is converted to any form of share
capital
b. Decrease in share capital
c. Decrease in earnings per share when convertible instruments are converted to ordinary shares
d. Decrease in earnings per share when share capital is converted to debt capital

8. If a share option is converted on March 31

a. The potential ordinary shares are included in diluted EPS up to March 31, and in basic EPS
from date converted to the year-end, both weighted accordingly
b. The ordinary shares are not included in diluted EPS
c. The ordinary shares are not included in basic EPS
d. The effect of the share option are included only in the previous year’s EPS calculation

9. In calculating where the potential ordinary shares are dilutive, the income figure used as the control
number is
a. Net income including discontinued operations
b. Income from continuing operations
c. Income before tax including discontinued operations
d. Retained earnings for the year after dividends

10. The nature of diluted earnings per share involving adjustment for share options can be describe as
a. Historical because earnings are historical
b. Historical because it indicates an entity’s valuation
c. Proforma because it indicates potential changes in number of shares
d. Proforma because it indicates potential changes in earnings

11. Antidilutive securities

a. Should be included in the computation of diluted earnings per share but no basic earnings per
share
b. Are those whose inclusion in earnings per share computation would cause basic earnings per
share to exceed diluted earnings per share
c. Include share options and warrants whose option price is less than the average market price
d. Should be disregarded in all EPS computations

12. The purpose of diluted earnings per share is to

a. Provide a comparison figure for debt holders
b. Indicate earnings shareholders shall receive in future periods
c. Distinguish between entities with a complex capital structure and entities with a simple capital
structure
d. Show the maximum possible dilution of earnings
13. What is the justification underlying the concept of potential ordinary shares in a diluted EPS
computation?
a. Form over substance
b. Substance over form
c. Form and substance considered equally
d. accounting practice

14. In calculating diluted earnings per share, which of the following should not be considered?
a. The weighted average number of ordinary shares outstanding
b. The amount of dividends declared on cumulative preference shares
c. The amount of cash dividends declared on ordinary shares
d. The number of ordinary shares resulting from the assumed conversion of bonds payable
outstanding

15. Which statement is correct in relation to EPS?

a. If preference shares is outstanding, dividend declared on preference shares s always deducted
from net income in calculating EPS
b. EPS can never be negative
c. If income from continuing operations is less than zero, potentially dilutive securities are
antidilutive
d. All issues convertible to ordinary shares must be included in the calculation of diluted EPS

16. An entity already has calculated the basic earnings per share. In determining diluted earnings per
share, the annual dividend on convertible cumulative preference share which is dilutive should be
a. Added back to the numerator of basic EPS whether declared or not
b. Deducted from the numerator of basic EPS only if declared
c. Added back to the numerator of basic EPS only if declared
d. Deducted from the numerator of basic EPS whether declared or not

17. In determining diluted earnings per share, dividends on nonconvertible cumulative preference
shares should be
a. Disregarded
b. Added back to net income whether declared or not
c. Deducted from net income only if declared
d. Deducted from net income whether declared or not

18. The “if converted” method of computing earnings per share assumes conversion of convertible
bonds payable at
a. Beginning of the earliest period reported or at time of issuance, if later
b. Beginning of the earliest period reported regardless of time of issuance
c. Middle of the earliest period reported regardless of time of issuance
d. Ending of the earliest period reported regardless of time of issuance
19. In determining diluted earnings per share, interest expense, net of income tax, on dilutive
convertible bond payable should be
a. Added back to weighted average shares outstanding for diluted earnings per share
b. Added back to net income for diluted earnings per share
c. Deducted from net income for diluted earnings per share
d. Deducted from weighted average shares outstanding for diluted earnings per share

20. When dilutive convertible bonds are the only potential ordinary shares
a. Diluted EPS will be greater if the bonds are not actually converted than not converted
b. Diluted EPS will be smaller if the bonds are not actually converted than not converted
c. Diluted EPS will be the same whether or not the bonds are converted
d. The effect of conversion on diluted EPS cannot be determined without additional information
 Chapter 22: Hyperinflation

1. Hyperinflation is indicated by all of the following, except

a. The general population prefers to keep its wealth in nonmonetary assets.
b. Interest rates, wages and prices are linked to a price index.
c. The cumulative inflation rate over three years is approaching or exceeds 100%.
d. All of these indicate hyperinflation.

2. All of the following would indicate that hyperinflation exists, except

a. The general population regards monetary amounts in terms of relatively stable foreign currency.
b. The cumulative inflation rate over three years is approaching, or exceeds 100%.
c. Inflation rates have exceeded interest rates in three successive years.
d. The general population prefers to keep wealth in nonmonetary assets.

3. Which would indicate that hyperinflation exists?

a. Sales on credit are at lower prices than cash sales.
b. Inflation is approaching or exceeds 20% per year.
c. Monetary items do not increase in value,
d. People prefer to keep their wealth in nonmonetary assets or a stable foreign currency.

4. An entity that wishes to present information about the effect of changing prices in a
hyperinflationary economy should report this information in
a. The body of the financial statements
b. The notes to financial statements
c. Supplementary schedule
d. Management’s report to shareholder

5. In a hyperinflationary economy, monetary items

a. Are not restated because they are already expressed in terms of the measuring unit current at
year-end
b. Are measured at fair value
c. Are restated applying the general price index
d. Are restated applying the specific price index

6. For purposes of adjusting financial statements for the changes in the general price level, monetary
items consist of
a. Assets and liabilities whose amounts are fixed by contract or otherwise in terms of pesos
b. Assets and liabilities which are classified as current
c. Cash and cash equivalents plus all receivables
d. Cash, other assets expected to be converted into cash, and current liabilities
7. All of the following are monetary items, except
a. Accounts payable
b. Accounts receivable
c. Administration costs paid in cash
d. Loan repayable at face value

8. The financial statements of an entity that reports in the currency of a hyperinflationary economy
shall be stated in terms of
a. Historical cost
b. Current cost
c. Fair value
d. Measuring unit current at the end of reporting period

9. The gain of loss on the net monetary position in a hyperinflationary economy shall be included in
a. Profit of loss and separately disclosed
b. Retained earnings
c. Equity
d. Comprehensive income

10. In a hyperinflationary economy, amounts not expressed in the measuring unit current at the end of
reporting period are restated by applying the
a. General price index
b. Specific price index
c. Both the general price index and the specific price index
d. Either the general price index or the specific price index

11. Which of the following is classified as nonmonetary?

a. Allowance for doubtful accounts
b. Accumulated depreciation
c. Premium on bonds payable
d. Advances to unconsolidated subsidiaries

12. Which of the following is classified as nonmonetary?

a. Warranty liability
b. Accrued expense
c. Unamortized discount on bonds payable
d. Refundable deposit
13. Which of the following is classified as nonmonetary?
a. Cash surrender value
b. Long-term receivable
c. Accrued liability on firm purchase commitment
d. Inventory

14. Which of the following is classified as monetary?

a. Goodwill
b. Equipment
c. Patent
d. Allowance for doubtful accounts

15. Purchasing power gain or loss results from

a. Monetary asset only
b. Monetary liability only
c. Both monetary asset and monetary liability
d. Nonmonetary asset and nonmonetary liability

16. During a period of inflation, an account balance remains constant. With respect to this account, a
purchasing power loss will be recognized if the account is a
a. Monetary asset
b. Monetary liability
c. Nonmonetary asset
d. Nonmonetary liability

17. During a period of inflation, an account balance remains constant. With respect to this account, a
purchasing power gain will be recognized if the account is a
a. Monetary liability
b. Monetary asset
c. Nonmonetary liability
d. Nonmonetary asset

18. During a period of deflation in which a liability account balance remains constant, which of the
following occurs?
a. A purchasing power loss if the item is a nonmonetary liability
b. A purchasing power gain if the item is nonmonetary liability
c. A purchasing power loss if the item is a monetary liability
d. A purchasing power gain if the item is a monetary liability
19. During a period of inflation in which a liability account balance remains constant, which of the
following occurs?
a. A purchasing power loss if the item is a nonmonetary liability
b. A purchasing power gain if the item is a nonmonetary liability
c. A purchasing power loss if the item is a monetary liability
d. A purchasing power gain if the item is a monetary liability

20. During a period of deflation, an entity would have the greatest gain in general purchasing power by
holding
a. Cash
b. Property, plant and equipment
c. Accounts payable
d. Mortgage payable

21. Financial statements that are expressed under a stable monetary unit are
a. Constant peso financial statements
b. Nominal peso financial statements
c. Current cost financial statements
d. Fair value financial statements

22. A general price level statement of financial position is prepared and presented in terms of
a. The general purchasing power of the peso at the latest end of reporting period
b. The general purchasing power of the peso in the base period
c. The average general purchasing power of the peso for the latest reporting period
d. The general purchasing power of the peso at the time the financial statements are issued

23. Which method of reporting attempts to eliminate the effect of the changing value of the peso?
a. Discounted net present value of future cash flows
b. Historical cost restated for change in the general price level
c. Replacement cost
d. Exit value

24. The restatement of historical peso financial statements to reflect the general price level change
results in presenting assets at
a. Lower of cost and net realizable value
b. Fair value
c. Cost adjusted for purchasing power change
d. Current replacement cost
25. Which argument in favor of price level adjusted financial statements is not valid?
a. Price level financial statements use historical cost
b. Price level financial statements compare uniform purchasing power among various periods
c. Price level financial statements measure current value
d. Price level financial statements measure earnings in terms of common peso
 Chapter 23: Current cost accounting

1. In current cost financial statements

a. General price level gains or losses are recognized
b. Amounts are always stated in common purchasing power
c. All items are different from what they would be in a historical cost statement of financial
position
d. Holding gains are recognized

2. An entity adjusted its historical cost income statement by applying specific price index to
depreciation, the income statement is prepared according to
a. Fair value accounting
b. Purchasing power accounting
c. Current cost accounting
d. Nominal peso accounting

3. When an entity prepares financial statements on a current cost basis, how is the cost of goods sold
computed?
a. Number of units sold times average current cost
b. Number of units sold times current cost of units at year-end
c. Number of units sold times beginning current cost
d. Beginning inventory at current cost plus cost of goods purchased less ending inventory at current
cost

4. In a period of inflation, an entity discloses income on a current cost basis. Compared to historical
cost income which conditions increases the current cost income?
a. Current cost is the same as historical cost
b. Current cost of land is less than historical cost
c. Current cost of cost of goods sold is less than historical cost
d. Ending net monetary assets are less than beginning

5. Could current cost financial statements report holding gains for goods sold during the period for
which of the following?
a. Goods sold
b. Inventory
c. Goods sold and inventory
d. Neither goods sold nor inventory