Asked by Shreyans Nanavati on Jul 25, 2024
Verified
Inventoriable costs may be thought of as a pool of costs consisting of which two elements?
A) The cost of beginning inventory and the cost of ending inventory
B) The cost of ending inventory and the cost of goods purchased during the year
C) The cost of beginning inventory and the cost of goods purchased during the year
D) The difference between the costs of goods purchased and the cost of goods sold during the year
Inventoriable Costs
Costs that are considered as assets on the balance sheet until the related goods are sold, at which point these costs are transferred to the cost of goods sold on the income statement.
Cost of Goods Purchased
The total expenses incurred to acquire inventory that is intended for resale.
Beginning Inventory
The value of a company's inventory at the start of an accounting period, serving as a basis for calculating cost of goods sold.
- Comprehend the notion of the cost of goods available for sale and the method of its distribution.
Verified Answer
ZK
Zybrea KnightJul 31, 2024
Final Answer :
C
Explanation :
Inventoriable costs consist of the cost of beginning inventory and the cost of goods purchased during the year. This total pool of costs is used to determine the cost of goods sold and the cost of ending inventory. The cost of ending inventory is not included in the pool of inventoriable costs, as it is simply a subset of those costs.
Learning Objectives
- Comprehend the notion of the cost of goods available for sale and the method of its distribution.