Cost of Goods Checkpoint Essay

A multi-step income statement for a trading business highlights the particular that between 40% and 60% of revenue from sales events is accounted for as the apostrophize of goods sold. The hail of goods attributed to a companys products is write downd as the company sells these goods. at that place ar several ways to calculate COGS but one of the more than basic ways is to start with the beginning scroll for the period and get the total amount of purchases made during the period then deducting the ending document.(According to Kimmel, Weygandt, and Kieso), salute of goods sold is found by taking the comprise of goods available for sale (beginning production inventory + net purchase), less the ending merchandise inventory (p. 244). In a wholesale or retail trading business, merchandise held for resale in the normal course of business is the largest addition owned by the organization. For this reason it is vital that accurate up-to-date records be maintained when goods a re acquired and inventories taken. Finished goods and or merchandise makes up cost of goods sold.There are two classifications of inventory merchandiser or manufacturer. In a merchandiser company inventory consists of many items all different. Whereas, a manufacturer, some inventory may not be ready (Kimmel, Weygandt, & Kieso, p. 282). Examples of items that make up cost of goods include produce, clothing, electronics, items that can be resold from manufacture to a company to the customer. This subject matter when the business acquires a finished product, the cost of the product goes into an inventory asset account.The customer will then purchase the product, finished good, the business transfers the cost of the product from the inventory asset account to the cost of goods sold expense account because the product is no longer in the businesss inventory (Kimmel, Weygandt, & Kieso, p. 282). References Kimmel, P. D. , Weygandt, J. J. , & Kieso, D. E. (2011). Financial accounting Tool s for business decision making (6th ed. ). Retrieved from The University of genus Phoenix eBook Collection database.