Inventories affect
A) only the statement of financial position.
B) only the income statement.
C) both the statement of financial position and the income statement.
D) neither the statement of financial position nor the income statement.

Question

Quizplus · Accepted Answer

Inventories are usually reported on both the statement of financial position (balance sheet) and the income statement. On the statement of financial position, inventories are reported as a current asset, while on the income statement, they are reported as a cost of goods sold. Therefore, inventories affect both the statement of financial position and the income statement.

Inventories Affect