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Balance Sheet Inventory and Income Statement Cost of Goods

In the T-account cost flow diagram of balance sheet inventory accounts and the income statement cost of goods sold account:

a. cost of goods sold is debited to finished goods inventory.

b. cost of goods manufactured is debited to finished goods inventory.

c. direct labor costs are credited to work in process.

d. raw materials purchases are debited to work in process.

Solution Summary

The solution explains the correct option in relation to cost flow diagram of balance sheet inventory accounts and the income statement cost of goods sold account.

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