Which statement best depicts the inventory cost flow equation?
A)Beginning inventory + Sales = Cost of sales + Ending inventory.
B)Beginning inventory + Goods manufactured = Cost of sales + Ending inventory.
C)Beginning inventory - Purchase returns = Cost of sales + Ending inventory.
D)Ending inventory + Purchases = Cost of sales + Beginning inventory.

Question

Quizplus · Accepted Answer

The inventory cost flow equation is accurately represented by "Beginning inventory + Goods manufactured = Cost of sales + Ending inventory." This equation outlines how the cost of inventory flows through an accounting period, starting with the beginning inventory, adding the cost of goods manufactured (or purchased), and then subtracting the cost of goods sold to arrive at the ending inventory value.

Which Statement Best Depicts the Inventory Cost Flow Equation