Question

The balance of the Cost of Goods Sold account at the end of the year represents:(A) The cost of inventory not sold in the current year.(B) The total sales revenue to customers.(C) The cost of inventory sold in the current year.(D) Total purchases of inventory for the year.

Answer 1

Answer:

The balance of the Cost of Goods Sold account at the end of the year represents the cost of inventory sold in the current year.

Explanation:

The Cost of Goods Sold account is debited at each sale for the cost of the product sold, so at the end of the year you will have the cost of all products sold during the year.  This cost includes the cost of the direct materials and the direct labor costs used to produce them.