Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

5. Inventory

Inventory Errors

Financial Accounting

5. Inventory

Inventory Errors

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Multiple Choice

Which of the following is NOT an example of inventory carrying cost?

Cost of goods sold

Obsolescence losses

Warehouse storage expenses

Insurance on inventory

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Verified step by step guidance

Understand the concept of inventory carrying cost: Inventory carrying costs are the expenses associated with holding and storing inventory. These costs typically include storage, insurance, depreciation, and obsolescence losses.

Analyze each option provided in the question: Review the definitions and characteristics of each term to determine whether it qualifies as an inventory carrying cost.

Option 1 - Cost of goods sold: This represents the direct costs of producing goods that are sold during a specific period. It is not related to holding inventory but rather to the sale of inventory, so it is NOT an inventory carrying cost.

Option 2 - Obsolescence losses: These occur when inventory becomes outdated or unsellable due to changes in market demand or product innovation. This is a valid example of inventory carrying cost.

Option 3 and 4 - Warehouse storage expenses and Insurance on inventory: Both are directly related to holding and storing inventory, making them valid examples of inventory carrying costs.