In a Traditional Manufacturing Environment, as the Cost of Goods

question 22

Multiple Choice

In a traditional manufacturing environment, as the cost of goods sold account increases, which account is most likely decreasing?

• A) Work in process inventory
• B) Finished goods inventory
• C) Raw materials inventory
• D) Cash

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Definitions:

Accrued Taxes Payable

Taxes that have been incurred but not yet paid, recorded as a liability on the company's balance sheet.

Current Liability

A financial obligation or debt that is due within one year or within the normal operating cycle of a business.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of the company’s financial condition.

Current Assets

Current assets are resources that a company expects to convert into cash or use up within one year, including cash, inventory, and receivables.