Which of the following statements about the types of inventory is (are) correct? Check All That Apply A. Merchandising companies produce the goods they sell to customers. B. When the manufacturing process is complete, the cost of the related inventory items is transferred into finished goods. C. Inventory is classified as an asset in the balance sheet until it is sold, at which time the cost is transferred to cost of goods sold in the income statement. D. Costs necessary to get inventory in condition and location for sale are not included as a cost of inventory.

Question

Reese Campos

Business

17 January, 10:08

Which of the following statements about the types of inventory is (are) correct? Check All That Apply A. Merchandising companies produce the goods they sell to customers. B. When the manufacturing process is complete, the cost of the related inventory items is transferred into finished goods. C. Inventory is classified as an asset in the balance sheet until it is sold, at which time the cost is transferred to cost of goods sold in the income statement. D. Costs necessary to get inventory in condition and location for sale are not included as a cost of inventory.

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Answers (1)

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Ruth Archer · Answer 1

The correct option is B and C

Explanation:

Inventory is the goods which are available for sale and the raw materials used while producing the goods which are available for sale. It is the most vital assets of the business.

So, the kind of inventory would be the manufacturing process which is completed, the cost is related to the inventory items, is transferred into the finished goods. And the inventory is categorized as an asset in the balance sheet till it is sold at which time the cost is transferred to COGS (cost of goods sold) in the income statement.