For a retail firm, the inventory sold is shown on the income statement as:

Question

Quizplus · Accepted Answer

The cost of goods sold represents the cost of the inventory sold during the period, and is therefore the most appropriate choice for a retail firm to show on its income statement. Purchases, purchases returns and allowances, and net purchases all relate to the company's inventory purchases, but do not directly represent the cost of the inventory sold.

For a Retail Firm, the Inventory Sold Is Shown on the Income