The cost of inventory shifts from asset to expense when the seller fulfills its contract with the customer,delivers the goods to the buyer and recognizes revenue.

Question

Quizplus · Accepted Answer

Once the goods are delivered and revenue is recognized, the cost of inventory is no longer considered an asset but rather an expense on the income statement. This is known as the cost of goods sold (COGS).

The Cost of Inventory Shifts from Asset to Expense When