1. Cost of goods sold is the difference between costs of goods available for sale and ending inventory a. True b. Falsc 2. The proceeds received from advance ticket sales for a concert to he held next month should be recorded as a current liability a. True b. False 3. Cost of goods sold represents an outflow of a resource, inventory, which is caused by the sale of products, a. True b. Falsc 4. If ending inventory is understated, then cost of goods sold is understated. a. True b. False 5. A liability must be recognized when a business is required to transfer assets or provide services to another entity at some point in the future for activities that have already occurred. a. True 6. Fulse 6. Amounts that have been accrued as expenses in the current year but not yet paid by the end of the year should be reported as current liabilities. a. True b. False 7. For a merchandising company, the cost of goods sold is suhtracted from net sales to arrive at gross profit. a. True b. False 8. The buyer must include goods purchased FOB shipping point in its inventory account if the goods ure still in transit a. True b. Falsc 9. When the shipping terms are FOB destination, the buyer is usually responsible for paying transportation costs. a. True 6. Fulse 10. A company provides a three-year warranty for its products. The estimated cost of parts and labour required to satisfy warranty claims should be recorded as a current liability in the period the products are sold. a. True b. Falsc 11. Employers withhold taxes from their employees' gross pay and later pay these amounts withheld to the taxing authority a True h. False 12. Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity. a. True b. False 13. An expenditure that does not increase the future economic benefits of the asset is referred to as a capital expenditure. 2. True b. False