The Cost of Inventory That Is Still on Hand and Has

question 42

Multiple Choice

The cost of inventory that is still on hand and has NOT been sold to customers is called:

• A)cost of goods sold, and it appears on the balance sheet.
• B)inventory, a current asset that appears on the income statement.
• C)inventory, a current asset that appears on the balance sheet.
• D)cost of goods sold, and it appears on the income statement.

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Definitions:

Consumer Goods

Products and services that are purchased or consumed by individuals for personal or household use.

Capital Goods

Long-lasting goods that are used to produce other goods or services and are not sold directly to consumers.

Law of Increasing Opportunity Costs

states that as production of one good increases, the opportunity cost of producing an additional unit of this good also increases, due to factors of production not being perfectly interchangeable.

Satisfy Wants

The process of fulfilling the desires or needs of consumers through the provision of goods and services.