If Inventories in a Business Using a Standard Cost System

Multiple Choice

If inventories in a business using a standard cost system are insignificant, the firm would be justified (in a practical sense) by disposing of variances each year:

A) As an adjustment to the finished goods inventory only.
B) As an adjustment to cost of goods sold only.
C) As adjustments to both inventory accounts and the cost of goods sold for the period.
D) As a special item (gain or loss) on the income statement for the period.
E) As an adjustment to the work-in-process (WIP) inventory only.