Cost of Goods Checkpoint Essay

A multi-step income statement for a affair tune highlights the fact that between 40% and 60% of revenue from sales is leveled for as the live of goods sold. The address of goods attri scarceed to a companys products is expensed as the company sells these goods. There argon several slipway to calculate COGS but one of the more basic ways is to start with the beginning enumeration for the flow rate and add the total amount of purchases make during the period consequently deducting the closing stock.(According to Kimmel, Weygandt, and Kieso), follow of goods sold is found by winning the hail of goods available for sale (beginning mathematical product livestock + net purchase), less the ending merchandise inventory (p. 244). In a wholesale or retail trading business, merchandise held for resale in the normal program of business is the largest asset owned by the organization. For this reason it is vital that accurate street smart records be maintained when goods are acqu ired and inventories taken. undefiled goods and or merchandise makes up cost of goods sold.There are two classifications of inventory merchandiser or manufacturer. In a merchandiser company inventory consists of galore(postnominal) items all different. Whereas, a manufacturer, some inventory may not be bushel (Kimmel, Weygandt, & Kieso, p. 282). Examples of items that make up cost of goods acknowledge produce, clothing, electronics, items that can be resold from manufacture to a company to the customer. This means when the business acquires a finished product, the cost of the product goes into an inventory asset accounting.The customer will then purchase the product, finished good, the business transfers the cost of the product from the inventory asset account to the cost of goods sold expense account because the product is no longer in the businesss inventory (Kimmel, Weygandt, & Kieso, p. 282). References Kimmel, P. D. , Weygandt, J. J. , & Kieso, D. E. (2011). fiscal account ing Tools for business decision make (6th ed. ). Retrieved from The University of Phoenix eBook Collection database.