Wholesalers and retailers account for cost of goods sold

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Reference no: EM13953413

Show that you understand how wholesalers and retailers account for cost of goods sold.

The cost of goods sold represents goods sold, as opposed to the inventory purchased during the year. Cost of goods sold is matched with the sales of the period.
The cost of goods sold in any one period is equal to: Beginning inventory þ

Purchases - Ending inventory.

Under the perpetual method, the Inventory account is updated after each sale or purchase of merchandise.
In contrast, under the periodic method, the Inventory account is updated only at the end of the period.
The cost of goods purchased includes any costs necessary to acquire the goods less any purchase discounts, returns, and allowances.
Transportation-in is the cost to ship goods to a company and is typically classified as part of cost of goods purchased.

Reference no: EM13953413

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