A seller of goods can easily associate (or match) the consumption of the benefits of the asset sold with revenues from its sale.At the time of sale and revenue recognition, the seller
A)removes the asset (inventory) from the seller's balance sheet.
B)recognizes revenue.
C)recognizes a reduction in an asset (inventory).
D)records the cost of goods sold expense in the same amount by which inventory decreases.
E)all of the above

Question

Quizplus · Accepted Answer

All of the options listed are typically done at the time of sale and revenue recognition. The seller removes the asset (inventory) from their balance sheet as it has now been sold to a customer. Revenue is recognized at the time of sale, typically the sales price of the item sold. This also results in a reduction in inventory, since the item is no longer in the seller's possession. Finally, the cost associated with the sale is recognized as Cost of Goods Sold, which is usually recorded as an expense in the same amount by which inventory decreases.

A Seller of Goods Can Easily Associate (Or Match) the Consumption