Final answer:
The cost of goods available for sale is allocated between ending inventory and cost of goods sold, where ending inventory refers to unsold goods and cost of goods sold refers to goods that have been sold to customers. The correct answer is option c.
Step-by-step explanation:
The cost of goods available for sale is allocated between ending inventory and cost of goods sold. This means when a business calculates its financials at the end of a period, it needs to determine how much of the goods it had available were actually sold, and how much remains unsold in inventory. The cost of the unsold goods is reported as the ending inventory on the balance sheet, while the cost of the goods sold is reported on the income statement as the cost of goods sold.
Goods can be either durable or nondurable, where durable goods such as cars and refrigerators typically have a longer lifespan compared to nondurable goods like food and clothing. The term inventories refers to those goods that a business has manufactured or purchased but has not yet sold to customers. These items are stored in warehouses and on shelves. Inventory levels can fluctuate, often decreasing when sales exceed expectations, or increasing if sales are lower than expected.
In summary, correct option for the allocation of the cost of goods available for sale is option C, Ending inventory and cost of goods sold.