Which most accurately describes the flow of costs through the accounting system?

Question

Quizplus · Accepted Answer

The flow of costs in a manufacturing company typically starts with the purchase of raw materials, which are then added to work in process inventory. As the raw materials are transformed into finished goods, factory overhead costs are applied to the work in process inventory. Once the goods are finished, the total cost of the finished product is calculated and added to the finished goods inventory. When the goods are sold, the cost of sales is calculated by subtracting the cost of the goods sold from the finished goods inventory. Therefore, choice A accurately describes the flow of costs in a manufacturing company.

Which Most Accurately Describes the Flow of Costs Through the Accounting