Question

Inventoriable costs are

A. only purchased goods for resale.

B. . a category of costs used only for manufacturing companies.

C. recorded as expenses when incurred and later reclassified as assets.

D. recorded as assets when incurred.

Answer 1

Inventoriable costs are recorded as assets when incurred and are related to the production of goods, later becoming expenses when the product is sold.

Step-by-step explanation:

Inventoriable costs are recorded as assets when incurred and expensed in the form of cost of goods sold when the product is sold. These costs include all of the direct costs associated with the production of goods, such as raw materials, labor, and overhead expenses specifically associated with the manufacturing process. Inventoriable costs are not just limited to purchased goods for resale, nor are they a category of costs used only by manufacturing companies. They are vital to businesses that produce goods as they represent the value of goods that are either in production or completed but not yet sold. When considering inventoriable costs, businesses must be careful to avoid double counting, ensuring the accurate representation of a nation's GDP.