Which of the following statements regarding cost of goods available for sale is true?
A)Cost of goods available for sale is an expense account.
B)Cost of goods available for sale is added to beginning inventory to determine cost of purchases during the period.
C)Cost of goods available for sale is subtracted from net sales to arrive at the gross margin.
D)Cost of goods available for sale is a "pool" of costs to be distributed between what was sold and what was not sold during a period.

Question

Quizplus · Accepted Answer

Cost of goods available for sale is a "pool" of costs to be distributed between what was sold and what was not sold during a period. This means that this amount includes the cost of beginning inventory and the cost of purchases made during the period. It is used to allocate the cost of goods sold and ending inventory.

Which of the Following Statements Regarding Cost of Goods Available