Proper Costs Allocation for Inventory Costing and Cost-Of-Goods-Sold Computations Are

question 117

Multiple Choice

Proper costs allocation for inventory costing and cost-of-goods-sold computations are important because:

• A)inventory costing is essential for proper balance sheet presentation
• B)most states have laws requiring proper balance sheet presentation and recommended allocation methods
• C)cost of goods sold is an important component in the determination of net income
• D)Both A and C are correct.

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Definitions:

Cash Payments Journal

A specialized accounting journal used to record all payments made by a business, including expenses and purchases.

Accounts Payable

Liabilities of a business that are due to creditors within a short period, usually less than a year, for goods, services, or supplies purchased on credit.

Subsidiary Ledger

A ledger that provides detailed information about accounts in the general ledger, typically used for accounts receivable, accounts payable, etc.

Creditors

Individuals or entities to whom money is owed by the business or individual for goods or services that have been delivered or used but not yet paid for.