The cost of an inventory item includes the costs of expenditures, directly or indirectly, necessary to bring an item to a salable condition and location.

Question

Quizplus · Accepted Answer

This is the definition of the cost of goods sold (COGS), which includes the cost of inventory items. These costs can include the cost of raw materials, labor, shipping, and other overhead expenses that are necessary to bring an item into inventory and make it available for sale.

The Cost of an Inventory Item Includes the Costs of Expenditures