For product costs associated with a particular product to be reported on the income statement:
A)The product must be transferred to Finished Goods Inventory.
B)The product must still be in Work in Process Inventory.
C)The product must be sold.
D)The product may be in any of the manufacturer's inventory accounts.
E)The company must expect to sell the product during the next twelve months.

Question

Quizplus · Accepted Answer

Product costs are reported on the income statement only when the product is sold. Until then, the costs are recorded in either the Raw Materials Inventory, Work in Process Inventory or Finished Goods Inventory accounts. Once the product is sold, the costs associated with the product are transferred from the Finished Goods Inventory account to Cost of Goods Sold, which is reported on the income statement.

For Product Costs Associated with a Particular Product to Be