The General Ledger Shows a Balance of $23,678 in the Inventory

question 51

Multiple Choice

The general ledger shows a balance of $23,678 in the Inventory account at the end of the period.A physical inventory shows a count of $22,078.The adjusting entry would be a:

• A) debit to Cost of goods sold and a credit to Cash.
• B) debit to Inventory and a credit to Cash.
• C) debit to Cost of goods sold and a credit to Inventory.
• D) debit to Inventory and a credit to Cost of goods sold.

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Definitions:

Variable Selling Expense

Costs that vary directly with the volume of sales or production, such as commissions and shipping charges.

Fixed Selling Expense

The costs associated with selling a product or service that do not vary with sales volume, such as salaries of sales staff and advertising expenses.

Variable Administrative Expense

Costs associated with administrative activities that vary with the level of business activity or output.

Reclassifying Costs

The process of moving costs from one category to another in accounting records.