Product cost information for manufacturing companies affects the income statement but does not affect the balance sheet.

Question

Quizplus · Accepted Answer

Product cost information affects the balance sheet by impacting the inventory and cost of goods sold accounts. The cost of goods sold is subtracted from revenue on the income statement, which results in the calculation of gross profit. Therefore, changes in product cost information can impact both the income statement and the balance sheet.

Product Cost Information for Manufacturing Companies Affects the Income Statement