If Inventories in a Business Using a Standard Cost System

question 85

Multiple Choice

If inventories in a business using a standard cost system are insignificant, the firm would be justified (in a practical sense) by disposing of variances each year:

• A) As an adjustment to the finished goods inventory only.
• B) As an adjustment to cost of goods sold only.
• C) As adjustments to both inventory accounts and the cost of goods sold for the period.
• D) As a special item (gain or loss) on the income statement for the period.
• E) As an adjustment to the work-in-process (WIP) inventory only.

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Definitions:

Austria

A landlocked country in Central Europe, known for its cultural heritage, historical significance, and alpine landscapes.

Otto Von Bismarck

A Prussian statesman who engineered the unification of Germany in 1871 and served as its first Chancellor.

German State

Refers to the political and geographic entity located in Central Europe, known for its rich history, culture, and significant role in both world wars.

Secular

Pertaining to worldly things or to things that are not regarded as religious, spiritual, or sacred; not affiliated with any religious denomination.