Which of the Following Accounts Will Not Be Found in the Cost

question 8

Multiple Choice

Which of the following accounts will not be found in the Cost of Merchandise Sold section on the income statement?

• A)Purchases
• B)Transportation In
• C)Sales Returns and Allowances
• D)Merchandise Inventory

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Definitions:

Physical Count

A manual inventory verification process where actual items are counted to ensure records match.

Inventory Account

A balance sheet account containing the cost of goods a company holds for sale in the ordinary course of business.

Goods in Transit

Merchandise or products that have been shipped by a seller but not yet received by the purchaser, present in the distribution channel.

Inventory Inclusion

The process of adding items to a company's inventory count, ensuring they are recorded as assets in the financial statements.