Natural resources that have been harvested but not yet sold are accounted for as:
A) Property, plant and equipment.
B) Cost of goods sold.
C) Operating expense.
D) Inventory.

Question

Quizplus · Accepted Answer

Natural resources that have been harvested but not yet sold are accounted for as inventory. This is because they are tangible assets held for sale in the ordinary course of business. The cost of acquiring and preparing the inventory for sale is capitalized as a cost of inventory until the inventory is sold, at which point it is recognized as cost of goods sold. Therefore, option D is the correct answer.

Natural Resources That Have Been Harvested but Not Yet Sold