Final answer:
Inventory on a business's balance sheet directly affects total assets as it represents unsold goods a company possesses. Upon sale, it impacts gross profit, net income, and cost of goods sold. The Correct Answer is Option.c.
Step-by-step explanation:
On a business's balance sheet, inventory affects total assets. Inventory represents goods that a business has produced but not yet sold, which are counted as assets because they are expected to provide future economic benefits through sales.
It affects gross profit, net income, and cost of goods sold (COGS) when the goods are eventually sold, influencing the income statement. However, inventory itself, as an unsold asset, appears on the balance sheet and contributes to the company's total assets at the reporting time.