Knowing the net cost of inventory allows a business to determine the actual cost of the merchandise purchased.

Question

Quizplus · Accepted Answer

The net cost of inventory takes into account any discounts, returns, or allowances that the business may receive. By subtracting these from the original purchase price, the business can determine the actual cost of the merchandise they have on hand, which is important for calculating profits and making informed pricing decisions.

Knowing the Net Cost of Inventory Allows a Business to Determine