Which of the following terms best describes "Cost of goods available for sale"?
A) Cost of goods available for sale is an expense account.
B) Cost of goods available for sale is added to beginning inventory to determine cost of purchases during the period.
C) Cost of goods available for sale is subtracted from net sales to arrive at the gross margin
D) Cost of goods available for sale is allocated into cost of goods on hand and cost of goods sold at the end of the fiscal year

Question

Quizplus · Accepted Answer

Cost of goods available for sale represents the total inventory that a company can sell during a certain period. It is calculated by adding any purchases made during the period to the beginning inventory. At the end of the fiscal year, this amount is allocated between the cost of goods sold (COGS) and the ending inventory (cost of goods on hand). This allocation is essential for preparing the income statement and the balance sheet.

Which of the Following Terms Best Describes "Cost of Goods