Question

Which of the following costs will not affect cost of goods sold?
A. Inventory-related selling costs.
B. Inventory inspection costs.
C. Inventory preparation costs.
D. Freight charges incurred to bring inventory to the warehouse.

Answer 1

Answer:

A. Inventory-related selling costs

Explanation:

Cost of goods sold is the carrying value of a good produced by a company. It involves all the costs that were incurred by a business in transporting and processing the product before it is ready for sales.

This includes inspection costs, inventory preparation costs, and freight charges.

However costs related to sales are not part of cost of goods sold. It does not add to the cost of producing the good.

Rather this is classified as general and administrative expenses