Final answer:
It is true that COGS may include the write down of inventory to market before the goods are sold because accounting principles mandate inventory to be reported at the lower of cost or market value.
Step-by-step explanation:
The statement that COGS may include the write down of inventory to market even though the goods haven't been sold is True. Cost of Goods Sold (COGS) represents the direct costs attributable to the production of the goods sold by a company. This figure includes the cost of the materials and labor directly used to create the product. It also includes overhead costs directly tied to the production process.
Accounting principles require that inventory be held on the balance sheet at the lower of cost or market value. This means that if the market value of inventory falls below its recorded cost, the company must recognize this decrease in value as a write-down expense. When such a write-down occurs, it is added to the COGS. This adjustment ensures that the company's gross profit reflects the lower expected return from the sale of the inventory.