Question

When goods are transferred from the WorkminusinminusProcess Inventory account to the Finished Goods Inventory​ account, ________.
A. total assets of the company remain constant

B. total assets and total liabilities increase by the same amount

C. total equity and total assets increase by the same amount

D. total liabilities increase and total equity decreases by the same amount

Answer 1

Answer:

A. total assets of the company remain constant

Explanation:

Mainly there are three stages to make the final product. These are

1. Raw material

2. Work in progress

3. Finished goods

When the product is finished in all respects. It is ready for sale.  

According to the given situation, when work in progress inventory is transferred to the finished goods, the inventory part or we can say the asset part remains constant. As a raw material, work in progress, and the finished goods are the inventory.  

The work in progress balance will get reduced by the same amount as finished goods increased.