Accounting Revision Notes for test

A cost object is an item which is assigned a separate measure of cost. A variable cost is a cost that changes whilst a fixed cost doesn't change. A direct cost is a cost that can be identified with or traced to a particular cost object in an economic manner (i.e. paper from a text book). Whereas an indirect cost is a cost that cannot be identified with or traced to a cost object …

…costs are transferred from work in process inventory to finished goods inventory, an account which records the cost of manufacturing goods that are complete and ready for sale. The costs are the 'stored' in finished goods until the products are sold. 4. When products are sold, the costs of those products are transferred from finished goods inventory to the cost of goods sold account, which is an expense during the period when the sale is made.