Cost of Goods Sold is considered an expense in the Profit and Loss Account.

The Capital account typically has a credit balance in the trial balance of a sole trader.

The Capital account typically has a credit balance in the trial balance.

The Units of Production Method calculates depreciation based on the actual usage or production of the asset.

The units of production method calculates depreciation based on the actual usage or production of the asset.

The units of production method calculates depreciation based on the actual usage or production output of the asset.

The sum-of-the-years'-digits method is chosen when the asset's benefits are expected to decline over time, allowing for higher depreciation initially.

A company may prefer FIFO over LIFO when prices are falling, as it results in lower cost of goods sold and higher profits.

The Units of Production Method is most appropriate for machinery that is used more in certain periods, as it ties depreciation to actual usage.

Accumulated depreciation is found in the Assets section of the trial balance as it is a contra asset account that reduces the value of fixed assets.

Under LIFO, COGS increases during inflation because the most recently purchased, higher-cost inventory is sold first.

LIFO (Last-In, First-Out) results in higher COGS during inflation, as the most recently purchased (and typically more expensive) inventory is considered sold first.

Annual depreciation under the Straight-Line Method is calculated as Cost of Asset divided by Useful Life.

Annual Depreciation Expense = (Cost - Salvage Value) / Useful Life = ($10,000 - $1,000) / 5 = $1,800.

The depreciation expense under the Sum-of-the-Years'-Digits Method is calculated as (Cost - Salvage Value) x (Remaining Life / Sum of Years).

LIFO (Last-In, First-Out) values inventory at the most recent purchase price, assuming the latest items purchased are sold first.

LIFO (Last In, First Out) results in higher cost of goods sold during periods of rising prices.

The declining balance method results in higher depreciation expenses in the earlier years, which decreases over time.

Under LIFO, the cost of goods sold would be higher in a period of rising prices because the latest, more expensive inventory is used first.

Under LIFO, the ending inventory is valued at the oldest costs, while FIFO values it at the most recent purchase prices.

Under LIFO, the cost of goods sold for the last 2 units sold is $30 + $25 = $55.

Annual Depreciation = (Cost - Salvage Value) / Useful Life = ($2,000 - $200) / 4 = $450.

IFRS 15 provides the framework for revenue recognition, which is applicable to partnerships as well.

IFRS 15 provides the framework for recognizing revenue from contracts with customers.

A balance sheet represents a snapshot of a company's assets, liabilities, and equity at a specific point in time.

A debt-to-equity ratio of 1 indicates that a company has equal financing from debt and equity.

A high debt to equity ratio indicates high financial risk, as it shows that a company is using more debt to finance its operations compared to equity.

A high inventory turnover ratio suggests efficient inventory management and strong sales.

A low gross profit margin indicates high production costs relative to sales.

A negative return on equity (ROE) indicates that the company is losing money relative to its equity.