Which of the following statement is true of costs of normal and abnormal spoilage?
A) Costs of normal spoilage are shown as an asset in a balance sheet; however, abnormal spoilage costs are shown as liabilities in a balance sheet.
B) Costs of abnormal spoilage are shown as an asset in a balance sheet; however, normal spoilage costs are shown as liabilities in a balance sheet.
C) Costs of abnormal spoilage are separately accounted for as losses of the accounting period in which they are detected.
D) Costs of normal spoilage are separately accounted for as losses of the accounting period in which they are detected.

Question

Quizplus · Accepted Answer

Costs of abnormal spoilage are separately accounted for as losses of the accounting period in which they are detected. Normal spoilage costs are typically included in the cost of goods produced and accounted for in inventory or cost of goods sold. Therefore, options A and B are incorrect. Option D is partially correct, as costs of normal spoilage are separately accounted for in the accounting period in which they occur, but they are not necessarily classified as losses.

Which of the Following Statement Is True of Costs of Normal