Cost of Goods Checkpoint Essay

A multi-step income statement for a employment caper highlights the fact that between 40% and 60% of revenue from sales is accounted for as the exist of goods sold. The cost of goods attributed to a familiaritys productions is expensed as the company sells these goods. in that respect are several ways to calculate COGS but mavin of the more basic ways is to start with the beginning inventory for the tip and add the total amount of purchases made during the period then deducting the terminus inventory.(According to Kimmel, Weygandt, and Kieso), cost of goods sold is found by taking the cost of goods getable 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 asset possess by the organization. For this reason it is vital that accurate up-to-date records be maintained when goods are acquired and inventori es taken. Finished goods and or merchandise agnises 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(prenominal) 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 means when the business acquires a absolute 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 write up Tools for busin ess decision making (6th ed. ). Retrieved from The University of Phoenix eBook Collection database.