Costs are transferred from the balance sheet to the income statement as cost of goods sold when ________.
A) finished goods are sold
B) goods are transferred from the Work-in-Process Inventory account to the Finished Goods Inventory account
C) direct materials, direct labor and manufacturing overhead are transferred to the beginning Work-in-Process Inventory account
D) the total of Cost of Goods Manufactured is determined

Question

Quizplus · Accepted Answer

Costs are transferred from the balance sheet to the income statement as cost of goods sold when finished goods are sold. This is because the costs associated with producing a product are included in the value of the finished goods inventory on the balance sheet until the product is sold. Once the product is sold, the costs are recognized as an expense on the income statement in the form of cost of goods sold.

Costs Are Transferred from the Balance Sheet to the Income