When Substantially All Risks and Rewards of Ownership Have Passed

question 116

Multiple Choice

When substantially all risks and rewards of ownership have passed to the purchaser, the purchaser then recognizes an asset. For this recognition, which of the following statements is correct?

• A) The purchaser must have both legal title and possession of the goods.
• B) Legal title and possession do not always pass to the purchaser at the same time.
• C) In practice, recording inventory purchases often takes place when they leave the seller's place of business.
• D) The purchaser must have possession of goods before it has legal title.

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Definitions:

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including costs of materials, labor, and overhead.