Question

When inventory is sold by a wholesaler or retailer, it is recorded in a different account on the income statement than a manufacturer would use.

True
False

Answer 1

False. When inventory is sold by a wholesaler or retailer, it is not recorded in a different account on the income statement than a manufacturer would use.

Step-by-step explanation:

False

When inventory is sold by a wholesaler or retailer, it is not recorded in a different account on the income statement than a manufacturer would use. The income statement accounts for the cost of goods sold (COGS) which includes the cost of the inventory that was sold, regardless of whether it was sold by a wholesaler, retailer, or manufacturer. The difference lies in the calculation of COGS, where manufacturers may include additional costs like direct labor and overhead expenses.