Inventories affect
A) only the balance sheet.
B) only the income statement.
C) both the balance sheet and the income statement.
D) neither the balance sheet nor the income statement.

Question

Quizplus · Accepted Answer

Inventories affect both the balance sheet and the income statement. On the balance sheet, the value of inventory is reported in the current assets section. On the income statement, the cost of goods sold is calculated based on the decrease in inventory from the beginning to the end of the period. The cost of goods sold is then subtracted from revenue to determine gross profit.

Inventories Affect