Which of the following statements is correct?

Question

Quizplus · Accepted Answer

In accounting, the cost of producing goods or services must be allocated between the cost of goods sold (COGS) and the closing inventory. This allocation is necessary to accurately reflect the cost of goods that were sold during the period and the cost of goods that remain unsold at the end of the period. Statement A is incorrect because closing inventory should be shown at the lower of cost and net realizable value, not the higher. Statement B is incorrect because manufacturing costs typically include direct materials, direct labor, and manufacturing overhead, but not administration costs, which are considered period costs and not product costs.

Which of the Following Statements Is Correct