In a merchandising firm,the computation of Cost of Goods Sold does NOT use ________.
A)merchandise inventory,beginning balance
B)merchandise inventory,ending balance
C)purchases of direct materials
D)purchases of merchandise

Question

Quizplus · Accepted Answer

Purchases of direct materials are not relevant to the computation of Cost of Goods Sold in a merchandising firm. Cost of Goods Sold represents the cost of the inventory sold during a particular period, and it is calculated by subtracting the ending inventory from the beginning inventory and adding the cost of goods purchased during the period. Direct materials are not considered in the computation of Cost of Goods Sold because they are typically used in the manufacturing process rather than sold in their raw form.

In a Merchandising Firm,the Computation of Cost of Goods Sold