The change in merchandise inventory level from the beginning to the end of the year does not affect cost of goods sold.

Question

Quizplus · Accepted Answer

The change in merchandise inventory level from the beginning to the end of the year can affect the cost of goods sold through the calculation of the cost of goods available for sale. If inventory levels increase, the cost of goods available for sale will be higher and thus increase the cost of goods sold. If inventory levels decrease, the cost of goods available for sale will be lower and thus decrease the cost of goods sold.

The Change in Merchandise Inventory Level from the Beginning to the End