QUESTION 1 Which of the following statements most accurately describes how costs flow through inventory accounts in a manufacturing organization? Costs flow from work in process inventory to finished goods inventory, then to direct materials inventory, and then over to cost of goods sold on the income statement. Costs flow from direct materials inventory to work-in-process inventory, to finished goods inventory, then to cost of goods sold on the income statement when the associated products are sold. Costs flow back and forth between balance sheet and income statement accounts. All costs associated with a manufacturing process are treated as expenses of the period and expensed immediately on the income statement in the period in which they are incurred