Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.)
-Prices are rising; profits are higher under this method.

Question

Quizplus · Accepted Answer

Costs that are directly related to the acquisition or production of inventory should be added to the inventory cost to determine the total cost of inventory. When prices are rising, the cost of purchasing or producing the inventory increases, and including those costs in the inventory cost will result in higher reported profits through the higher cost of goods sold.

Match the Costs That Might Be Included as Part of the Cost