The principle for cost inclusion is that the balance sheet amount for inventory should include all costs incurred to
A)acquire goods, only.
B)prepare the goods for sale, only.
C)acquire goods and prepare them for sale.
D)acquire goods, prepare them for sale, and transport them to the buyer.
E)acquire goods, prepare them for sale, and sales commissions.

Question

Quizplus · Accepted Answer

The principle for cost inclusion is that the balance sheet amount for inventory should include all costs incurred to acquire goods (purchase price, import duties, and other taxes), prepare them for sale (direct labor, production overhead. etc.), and bring them to the condition and location necessary for sale. However, cost of transporting goods to the buyer and sales commissions are not included in the cost of inventory.

The Principle for Cost Inclusion Is That the Balance Sheet