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Below is an essay on "Business" from Anti Essays, your source for research papers, essays, and term paper examples.

3/14/2014
3/14/2014
XACC/290C
    Celena Hudak
XACC/290C
    Celena Hudak
Cost of Goods
By Debra Schondel
Cost of Goods
By Debra Schondel

Cost of Goods

Companies using a periodic inventory system must take a physical inventory for two different purposes: to determine the inventory on hand at the balance sheet date, and to determine the cost of goods sold for the period (Kimmel, Weygandt, & Kieso, (2011), Ch. 6, pp. 283).   The inventory that you have when it is sold in a period of time. The items that make up cost of goods sold are items you sell if you manufacture or buy and sell you would deduct all the costs for such items. Your beginning inventory would be what you had in inventory at the end of the previous year. After you have sold your goods at the end of the year you would do an inventory count on what is left that would be your ending inventory.¬†You can only deduct cost of goods sold for the inventory you have. First you have to figure out what the gross profit is this is the difference between the sales and the costs of goods sold all of this is put on the income statement. The sales account that you post is a revenue account this is used for the sales of the merchandise you are selling. This can include cash or charge. If you have coupons to apply towards the purchase or if your customers get a discount this gets a little tricky. Then you would have to determine if you are going to use gross or net method on sales. You have a lot to consider prior to creating your income statement. This is how you keep everything organized.

References:
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2011). Financial accounting: Tools for business decision making (6th ed.). Hoboken, NJ: John Wiley & Sons.

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