If at the end of the fiscal year the variances from standard are significant, the variances should be transferred to the:
A) work in process account only
B) cost of goods sold account only
C) finished goods account only
D) work in process, cost of goods sold, and finished goods accounts

Question

Quizplus · Accepted Answer

If the variances from standard are significant at the end of the fiscal year, they should be transferred to the work in process, cost of goods sold, and finished goods accounts. This is because any significant variances should be reflected in the cost of goods sold and the value of inventory on the balance sheet. The work in process account represents the cost of partially completed goods, and the finished goods account represents the cost of completed goods that have not yet been sold. Therefore, the variances should be transferred to all three accounts to ensure an accurate reflection of costs and inventory values.

If at the End of the Fiscal Year the Variances