Create an account
cost of goods sold
the outflow of resources caused by the sale of inventory and is the most important expense on the income statement of companies that sell goods instead of services
gross margin (profit)
sales revenues -- cost of goods sold; indicates the extent to which the resources generated by sales can be used to pay operating expenses and provide for net income
companies (retailers/wholesalers) that purchase inventory in a finished condition and hold it for resale without further processing
companies that buy and transform raw materials into a finished product which is then sold
the raw materials that are used in production as well as other production costs such as labor and utilities
the portion of the cost of goods available for sale that remains unsold at the end of the year
perpetual inventory system
balances for inventory and cost of goods sold are continually updated with each sale or purchase of inventory
periodic inventory system
records the cost of purchases as they occur, takes a physical count of inventory at the end of the period and applies the cost of goods sold model to determine the balances of ending inventory and cost of goods sold
the purchaser may choose to keep the merchandise if the seller is willing to gran a dudction from the purchase price
steals sales from the next period and distorts the results of the company's operations
first-in, first-out (FIFO) method
the earliest purchases are assumed to be sold first, and more recent purchases are in ending inventory
average cost method
allocates the cost of goods availab eofr sale between ending inventory and cost of goods sold based on a weighted average cost per unit
Please allow access to your computer’s microphone to use Voice Recording.
Having trouble? Click here for help.
We can’t access your microphone!
Click the icon above to update your browser permissions and try again
Reload the page to try again!Reload
Press Cmd-0 to reset your zoom
Press Ctrl-0 to reset your zoom
It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.
Please upgrade Flash or install Chrome
to use Voice Recording.
For more help, see our troubleshooting page.
Your microphone is muted
For help fixing this issue, see this FAQ.
Star this term
You can study starred terms together