Which of the Following Statements Is Correct

question 51

Multiple Choice

Which of the following statements is correct?

• A)Cost of goods available for sale is allocated between costs of goods sold and inventory at year-end.
• B)A purchase of inventory on credit increases both cost of goods available for sale and cost of goods sold.
• C)Purchases of inventory during a period less that period's cost of goods sold equals ending inventory regardless of the beginning inventory amount.
• D)Cost of goods available for sale equals ending inventory plus purchases.

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Definitions:

Overhead Accounts

Accounts that track the indirect costs of production or services, such as utilities and rent.

Resource Consumption

The process of using up resources, such as raw materials, labor, and energy, in the production of goods and services.

Manufacturing Overhead

Manufacturing overhead encompasses all production costs except direct labor and direct materials used in manufacturing.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing more accurate costs of producing specific products or services.