When finished goods are sold, the entry to record the cost of goods sold includes

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The cost of goods sold represents the cost of the goods that were sold during the period. The entry to record the cost of goods sold includes a debit to the Cost of Goods Sold account and a credit to the Finished Goods Inventory account. This reduces the inventory account and increases the cost of goods sold account on the income statement. Therefore, option B is the best choice.

When Finished Goods Are Sold, the Entry to Record the Cost