Ace the CMA 2026 Challenge – Unlock Your Accounting Superpowers!

Selling expenses are related to the costs incurred in the process of selling the inventory rather than the costs associated directly with the inventory itself. Inventory costs typically include expenses such as purchase costs, which cover the price paid to acquire inventory; carrying costs, which involve costs related to storing and maintaining inventory; and ordering costs, associated with ordering and replenishing stock.

Having a clear distinction between inventory-related costs and expenses incurred further along in the business process, such as selling expenses, is crucial for accurate financial reporting and understanding the total costs of inventory management.