Question

When are product costs counted as cost of goods sold Select one:
O a. After products are completed, but before they are sold. O b. Before products are sold. O c. Never O d. After products are sold.

Answer 1

Answer is d. After products are sold

Explanation for above:

Cost of goods sold is the value of finished goods which is sold. It is an expense account which is charged to income statement. It is deducted from sales to get the gross profit. The cost of goods sold account is debited with product cost when the goods are sold. The entry for the same is cost of goods sold debit and credit is given to finished goods. After goods are completed they become part of finished goods inventory till they are sold .Before products are sold they are part of finished goods inventory. Hence answer is d. After products are sold