Asked by Kaitlyn Hearn on May 01, 2024
Verified
Inventory is an asset on the balance sheet and a _____ on the income statement.
A) liability
B) footnote
C) statement
D) variable expense
Balance Sheet
A financial statement that provides a snapshot of a company's financial condition at a specific moment in time, detailing assets, liabilities, and shareholders' equity.
Variable Expense
A cost that changes in proportion to the level of activity or volume of output in a business.
Income Statement
A financial document that summarizes a company's revenues, expenses, and profits over a specific period, showing its operational performance.
- Gain insight into the effects of inventory on the balance sheet and cost of goods sold, and understand its dual purpose in organizations.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
D
Explanation :
Inventory is not considered a liability or a statement on the income statement. It is also not discussed in a footnote. Instead, inventory is included as a variable expense on the income statement as it is counted as a cost of goods sold when calculating net income.
Learning Objectives
- Gain insight into the effects of inventory on the balance sheet and cost of goods sold, and understand its dual purpose in organizations.