- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 2. Analyzing Income Statements
- Subject 2. Expense Recognition - Inventory
CFA Practice Question
At year-end, all costs of goods available for sale either become cost of goods sold or ending inventory. True or False?
Correct Answer: True
Cost flow assumptions are different methods of allocating historical costs. Each assumption allocates different amounts to ending inventory, so that different amounts result in cost of sales. However, the sum of the two amounts is always the cost of goods available for sale.
User Contributed Comments 2
| User | Comment |
|---|---|
| vatsal92 | It means either inventory is COGS or Closing stock. |
| kieranjh | don't the goods have to actually be sold to be COGS? it seems logical that an unsold good is just inventory. |