In the income statement 'by function' of a retailer,the cost of goods sold is the equivalent of:
A) Purchases plus average inventory .
B) Goods available for sale minus ending inventory.
C) Purchases minus beginning inventory plus ending inventory.
D) Ending inventory plus purchases of new merchandise minus beginning inventory.

Question

Quizplus · Accepted Answer

The cost of goods sold represents the total cost of the products that a retailer sells during a given period. It is calculated by subtracting the ending inventory from the cost of goods available for sale. Therefore, the correct answer is B, which is "goods available for sale minus ending inventory." Option A is incorrect because it includes average inventory, and option C is incorrect because it includes beginning inventory. Option D is incorrect because it includes purchases of new merchandise, which may not necessarily be sold during the period in question.

In the Income Statement 'By Function' of a Retailer,the Cost