When goods are transferred from the Finished Goods Inventory account to the Cost of Goods Sold account,the product costs move from the balance sheet to the income statement.

Question

Quizplus · Accepted Answer

This is true. When goods are transferred from the Finished Goods Inventory account to the Cost of Goods Sold account, the product costs are recognized as an expense on the income statement, reducing net income for the period. This results in a decrease in the balance of the Finished Goods Inventory account and an increase in the Cost of Goods Sold account.

When Goods Are Transferred from the Finished Goods Inventory Account