Which statement is NOT true regarding the sales method of accounting for byproducts.
A)the method makes no journal entries until the byproduct is sold
B)this method is the preferred method because of the matching principle
C)revenues of the byproduct can be recorded in the income statement as revenue
D)revenues of the byproduct can be recorded as a reduction of cost of goods sold in the income statement

Question

Quizplus · Accepted Answer

While the byproducts method does follow the matching principle, it is not necessarily the preferred method. Additionally, there is no set "preferred method" for accounting for byproducts, as it largely depends on the specific circumstances of the business. The other statements are true: the sales method makes no journal entries until the byproduct is sold, revenues of the byproduct can be recorded in the income statement as revenue, and revenues of the byproduct can be recorded as a reduction of cost of goods sold in the income statement.

Which Statement Is NOT True Regarding the Sales Method of Accounting