Question

When units are sold, the cost associated with the units is credited to which account?

Multiple Choice
a)Raw Materials Inventory
b)Work in Process Inventory
c)Finished Goods Inventory
d)Cost of Goods Sold

Answer 1

The cost associated with units sold is credited to the Cost of Goods Sold account. (Option D).

Step-by-step explanation:

The correct answer is d) Cost of Goods Sold.

When units are sold, the cost associated with the units is recognized as an expense and is credited to the Cost of Goods Sold (COGS) account. COGS represents the direct costs involved in producing or acquiring the goods that are sold.

For example, if a company sells a product for $100 and the cost of producing or acquiring that product is $60, then the $60 would be credited to the COGS account.