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Can you think of a selling and administrative cost that might sit on a balance sheet...

Can you think of a selling and administrative cost that might sit on a balance sheet in an account that acts like an inventory account (in accounting inventory is reserved to items the company sells) before it would get expensed on the income statement?

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Answer #1

Inventory that is sold appears in the income statement under the Cost of goods sold account. The beginning inventory for the year is the inventory left over from the previous year—that is, the merchandise that was not sold in the previous year. Any additional productions or purchases made by a manufacturing or retail company are added to the beginning inventory. At the end of the year, the products that were not sold are subtracted from the sum of beginning inventory and additional purchases. The final number derived from the calculation is the cost of goods sold for the year.

SG&A (selling, general, and administrative expenses) are included under operating expenses as a separate line item. SG&A expenses are expenditures that are not directly tied to a product such as overhead cost

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