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29.07.2022 - 04:41

Inventories affect: a. only the balance sheet b. only the income statement c. both the balance sheet and the income statement d. neither the balance sheet nor the income statement

Question:

Inventories affect:

a. only the balance sheet

b. only the income statement

c. both the balance sheet and the income statement

d. neither the balance sheet nor the income statement

Answers (1)

Rosalie April 1, 2023 в 15:35

The correct answer is c. both the balance sheet and the income statement. Inventories are assets that a company holds which are intended for sale or used in the production process. Therefore, the value of the inventory affects the balance sheet because it is included in the current assets section. The inventory value also impacts the cost of goods sold (COGS) on the income statement, which affects gross profit and net income. Therefore, inventories impact both the balance sheet and the income statement.

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