In a Perpetual Inventory System,the Flow of Inventory Cost Is

question 53

Multiple Choice

In a perpetual inventory system,the flow of inventory cost is:

• A)First through the income statement,then through the balance sheet.
• B)First through the balance sheet,then through the income statement.
• C)Only through the balance sheet and not the income statement.
• D)Only through the income statement and not the balance sheet.

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Definitions:

Executory Costs

Costs associated with maintaining and operating leased property, such as insurance, maintenance, and taxes, often shared by lessee and lessor.

Lease Transaction

An agreement where a lessor allows a lessee to use an asset in exchange for payment over a predetermined period.

Capital Lease

A lease classified as an asset purchase for accounting purposes, where the lessee assumes some of the risks and benefits of ownership.

Lease Term

The period during which a lessee has the right to use an asset, as stipulated in a lease agreement.