33 Lecture

1. What is the purpose of the income statement in a manufacturing concern? a. To show the financial position of the business b. To measure the liquidity of the business c. To monitor the profitability of the business d. To report the cost of goods manufactured and sold

Answer: c. To monitor the profitability of the business

2. Which of the following is not an asset of a manufacturing concern? a. Raw materials b. Work-in-progress c. Finished goods d. Accounts payable

Answer: d. Accounts payable

3. What is the purpose of the balance sheet in a manufacturing concern? a. To show the financial position of the business b. To measure the liquidity of the business c. To monitor the profitability of the business d. To report the cost of goods manufactured and sold

Answer: a. To show the financial position of the business

4. Which financial statement shows the cost of goods manufactured and sold? a. Income statement b. Balance sheet c. Statement of cash flows d. Statement of cost of goods manufactured and sold

Answer: d. Statement of cost of goods manufactured and sold

5. What is the purpose of the statement of cash flows in a manufacturing concern? a. To show the financial position of the business b. To measure the liquidity of the business c. To monitor the profitability of the business d. To monitor the cash flow of the business

Answer: d. To monitor the cash flow of the business

6. Which of the following is not a liability of a manufacturing concern? a. Accounts payable b. Loans payable c. Work-in-progress d. Accrued expenses

Answer: c. Work-in-progress

7. What is the purpose of the statement of cost of goods manufactured and sold? a. To show the financial position of the business b. To measure the liquidity of the business c. To monitor the profitability of the business d. To report the cost of goods sold during the period

Answer: d. To report the cost of goods sold during the period

8. Which financial statement shows the cash inflows and outflows of a manufacturing concern? a. Income statement b. Balance sheet c. Statement of cash flows d. Statement of cost of goods manufactured and sold

Answer: c. Statement of cash flows

9. Which of the following is an example of a manufacturing concern asset? a. Accounts receivable b. Inventory of finished goods c. Prepaid expenses d. Common stock

Answer: b. Inventory of finished goods

10. What is the purpose of financial statements in a manufacturing concern? a. To satisfy the reporting requirements of external stakeholders b. To monitor the profitability, financial position, and cash flow of the business c. To make informed business decisions d. All of the above

Answer: d. All of the above

1. What are the three financial statements used in a manufacturing concern? Describe each one briefly. Answer: The three financial statements used in a manufacturing concern are the income statement, the balance sheet, and the statement of cash flows. The income statement shows the revenues, cost of goods sold, and operating expenses of the business for a period of time. The balance sheet shows the assets, liabilities, and equity of the business at a specific point in time. The statement of cash flows shows the cash inflows and outflows of the business for a period of time.

2. What is the purpose of the statement of cost of goods manufactured and sold in a manufacturing concern? Answer: The purpose of the statement of cost of goods manufactured and sold is to report the cost of goods manufactured during the period and the cost of goods sold during the same period.

3. What are the three components of cost of goods sold in a manufacturing concern? Answer: The three components of cost of goods sold in a manufacturing concern are direct materials, direct labor, and manufacturing overhead.

4. What is the difference between direct materials and indirect materials in a manufacturing concern? Answer: Direct materials are materials that are directly used in the production of goods, while indirect materials are materials that are used in the production process but do not become part of the finished product.

5. What is work-in-progress in a manufacturing concern? Answer: Work-in-progress in a manufacturing concern refers to goods that are partially completed and still in the production process.

6. What is the purpose of the inventory turnover ratio in a manufacturing concern? Answer: The purpose of the inventory turnover ratio is to measure how quickly a manufacturing concern is able to sell its inventory.

7. What is the difference between gross profit and net income in a manufacturing concern? Answer: Gross profit is the profit a manufacturing concern makes after deducting the cost of goods sold from its revenue, while net income is the profit a manufacturing concern makes after deducting all of its expenses from its revenue.

8. What is the purpose of the statement of cash flows in a manufacturing concern? Answer: The purpose of the statement of cash flows in a manufacturing concern is to show the cash inflows and outflows of the business over a period of time.

9. How is the cost of goods sold calculated in a manufacturing concern? Answer: The cost of goods sold in a manufacturing concern is calculated by adding the direct materials used, direct labor, and manufacturing overhead incurred during the production process.

10. What is the purpose of the balance sheet in a manufacturing concern? Answer: The purpose of the balance sheet in a manufacturing concern is to show the assets, liabilities, and equity of the business at a specific point in time.

Financial statements of a manufacturing concern are crucial to determine the financial position and performance of the company. These statements include the income statement, balance sheet, statement of cash flows, and statement of cost of goods manufactured and sold. The income statement of a manufacturing concern shows the revenue, cost of goods sold, and operating expenses incurred by the company during a specific period. The cost of goods sold includes direct materials, direct labor, and manufacturing overhead. Operating expenses include all other expenses like selling and administrative expenses. The balance sheet shows the assets, liabilities, and equity of the company at a specific point in time. The assets include current and fixed assets, while liabilities include current and long-term liabilities. The equity includes the owner's equity and retained earnings. The statement of cash flows shows the cash inflows and outflows of the company over a period. It is divided into three sections: operating activities, investing activities, and financing activities. The statement of cost of goods manufactured and sold shows the cost of goods manufactured during the period and the cost of goods sold during the same period. The cost of goods manufactured is calculated by adding the direct materials used, direct labor, and manufacturing overhead incurred during the production process. Manufacturing concerns deal with work-in-progress inventory, which is goods that are partially completed and still in the production process. The inventory turnover ratio is used to measure how quickly a manufacturing concern is able to sell its inventory. Gross profit is the profit made after deducting the cost of goods sold from revenue, while net income is the profit made after deducting all expenses from revenue. It is essential to analyze both to determine the financial performance of a manufacturing concern. In conclusion, financial statements of a manufacturing concern provide valuable insights into the financial position and performance of the company. These statements help investors and stakeholders make informed decisions and plan for the future.