Week 4 DQ1

How would you calculate cost of goods sold? What items make up cost of goods sold? How does beginning and ending inventory affect cost of goods sold?

One can determine the cost of goods sold when using a periodic inventory system does not calculate the cost of goods sold until the end of the period. At the end of the period a count is done to determine the ending balance of the inventory. After this is completed the cost of goods sold is calculated by subtracting ending inventory from the goods still available for sale. The goods available for sale is the sum of the beginning inventory plus purchases. The periodic system creates different accounts for purchases, freight, returns, and discounts (p. 244). The perpetual system makes an entry to record cost of goods sold and...