To determine cost of goods sold for the period requires:
A) subtracting ending inventory from the goods available to sell, which is the beginning inventory plus purchases
B) adding ending inventory to the goods available to sell, which is the beginning inventory plus purchases
C) subtracting beginning inventory from the goods available to sell, which is the ending inventory plus purchases
D) adding beginning inventory to the goods available to sell, which is the ending inventory plus purchases

Question

Quizplus · Accepted Answer

Cost of goods sold (COGS) is calculated by subtracting ending inventory from the goods available to sell. Goods available to sell is the sum of beginning inventory and purchases made during the period. Therefore, the formula for calculating COGS is: COGS = Beginning inventory + Purchases - Ending inventory. Option A correctly reflects this formula.

To Determine Cost of Goods Sold for the Period Requires